Paul Volcker: Unemployment Has No Short-Term Solution

BEIJNG (AP) -- A top economic adviser to President Barack Obama said Tuesday he sees no short-term way to reduce high U.S. unemployment and expects slow growth for the near future.

The comments from Paul Volcker come after the Federal Reserve announced last week that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds.

"I have no answer to it at the moment, and I think that is the basic problem. I suspect that it will gradually decline," Volcker said when asked about the unemployment rate. "But the basic fact of the matter is that the economic outlook is for continuing but limited increases in economic activity for the next year or more."

Volcker is chairman of Obama's Economic Recovery Advisory Board, and served as Fed chief from 1979 until 1987 under presidents Jimmy Carter and Ronald Reagan.

He was speaking in Beijing at a meeting of the International Financial Forum, a non-governmental group of bankers and finance officials from the Untied States, China and other countries.

Comments

[World Citizen]

01:48 AM on 11/23/2010

regardless of our high unemployment, companies continue to outsource and offshore. This will not end anytime soon. The only new jobs that U.S. can count on are those that cannot be offshored. Think fast food, supermarket kind of jobs. Free trade and globalization have simply sucked the living daylights out of americans and there is no end in sight.

[m1jones]

07:42 PM on 11/17/2010

Put tarriffs on imports to enhance manufacturing in the US. China does it, and controls their currency. The US has simply been wrong about free trade. We've got to see that our own citizens can earn a living before we ship low-skilled jobs to third world countries. That's why India and China are thriving, and we are falling further and further behind. Our government and trade politicies are really stupid.

[CharlesCT]

11:22 AM on 11/19/2010

I agree. It is so simple, if, and that is a big IF, jobs are to be saved here. There are a lot of people that are getting very rich by this policy of shipping out jobs. They are the ones running this country and they have the power. The Trilaterals want what we have.

[World Citizen]

01:44 AM on 11/23/2010

The reason why it's no longer so simple is because a lot of the work can be done long-distance and corporations can always hide their offshoring and outsourcing through another foreign subsidiary. Company execs, although americans are running on greed and do not care less for the long-term viability of the United States. For them, offshoring and outsourcing is as necessary as hiding their revenues elsewhere. The administration needs a task force that is purely dedicated to thinking of all the ways to close all the outsourcing / offshoring loopholes.

[MaryfromIL]

05:43 PM on 11/17/2010

sure there is a quick solution: Tax the bejesus out of companies that outsource and send manufacturing jobs overseas. Done and done.

[4TJefferson]

06:50 PM on 11/10/2010

I quess Paul never heard of the CCC.

[Silverwolf72]

04:53 PM on 11/10/2010

I don't know how many people have seen most of the big manufacturing places but even if manufacturing returned to the USA there would still be no jobs, most of the places are so automated that it only requires 1 or 2 people to do what use to take hundreds not that long ago.
There will need to be a huge shift in the economy that is less tied to working to live, I have no idea how that is going to happen.

[m1jones]

07:47 PM on 11/17/2010

All the beautiful natural stone retaining walls, woodsy grand hotels, and winding trails of our national parks were built by the CCC during the depression. Put people to work doing things that we otherwise cannot afford to do. Our infrastructure projects now rely on steel manufacturer in China and shipped on Liberian freighters. Fund public infrastructure which must rely entirely on American products. The solutions are easy. The will to act is lacking in both parties. We have a nation of wimp leaders who are poorly educated (all religious fundamentalists), lacking in practical work (Obama and other prestigious academics), and corporate greedhogs (international corporate pawns).

[EthosLogosPathos]

10:23 AM on 11/10/2010

He is entirely correct - unemployment will remain stubbornly high (7%+) for a few years.

To keep unemployment stable at its current level requires 2.5% GDP growth. To bring it down we need more than 2.5% growth, in fact, we'd need more than 3% GDP growth to put a serious dent in the unemployment rate.

The economy clocked a 1.6% growth rate in Q2 and a 2% growth rate in Q3 (which will be revised up or down in the next few weeks).

The only reason the headline unemployment rate didnt increase was because of the slide in the labor market last month (net loss of 254,000).

[skullman]

09:41 AM on 11/10/2010

Is he saying that there aren't enough Walmart jobs or fast food jobs for everybody? We are screwed.

[avg american]

08:52 AM on 11/10/2010

America this depression is not your fault Big corp America took your homes, money and your opportunities. The movie Inside Job explains how they did it. Go see it, bring a friend.
http://www.sonyclassics.com/insidejob/
Produced, written and directed by Charles Ferguson.

Many thanks to the credible people that stepped forward to support the making of the movie.”


Every 99er should see this movie. It will explain why you cannot find a job.

Every American who lost their retirements savings. You will see where it went.

Americans who had their homes foreclosed on. You will understand the racket that was set up against you.

Excellent explanation on CDO’s and credit swaps. A third grader could get it.

Many thanks to the credible people that stepped forward to support the making of the movie.”

[Truth9834]

02:40 AM on 11/10/2010

Unemployment has no short-term solution? Perplexing statement.

US Corps are sitting on a record amount of cash. They are adding thousands of foreign jobs. They are transferring IP outside the US so they may than sell these products back to the US with little if any US or foreign taxes. From what I have read and seen these IP transfers are increasing at a record pace (part of my job is to review these US to foreign IP transfer agreements).

Three years ago I interviewed for a position to oversee/manage a department of sixty of which my position was third from the top. The department employees ten years before this interview, of which their were twenty, were all located in the US. During the interview process I learned only three were left in the US and all of the other employees within this department were located in India. I have no problem with company's trying to lower costs and increase the bottom line however I was surprised by this development. More and more company's are following this pattern of outsourcing "white collar" jobs (middle to high paying) to India.

Many "white collar" jobs are gone forever, thanks to the internet, and the only thing left that we as voters can do to protect our country, our family, and our future is to bring back manufacturing jobs. What other choice do we have? Either we add tariffs or we live with low paying service jobs.

[TomFox]

12:03 PM on 11/10/2010

Great point...

[MaryfromIL]

05:44 PM on 11/17/2010

tax the heck out of those that send white collar jobs overseas.

[noaxe397]

12:40 AM on 11/10/2010

Someone on MSNBC today said Volcker, Reagan's Fed chairman, is today considered a "lefty."
That's how far things have shifted politcally today.

[Peter Combs]

11:46 PM on 11/09/2010

Regretably, the USA in their anxiety dirven by the desire for Quarterly profits has opted to write trade deals which harm the American economy. They made deals purporting to expand our markets, but resulted in exporting jobs to countries that opt more often than not to play on an uneven playing field claiming emerging market exemptions. China is STILL catagorized as an Emerging country....for example.

Big retailers get cheap goods, like Wal-Mart, who pay their employees peanuts and sell inexpensive goods to people who can afford little else. Wal-Mart is not the whole problem, but they sure are the poster child for everthing thats wrong with our Foreign Trade dealings.

Today the USA makes virtuall nothing....Google is now an Offshore Corp to avoid Fed taxes, Apple is the second largest company by market cap on the planet and everthihng they sell is made in China...and India has managed to eat away at much of our onetime future "The Service Sector"...whats left to create jobs?

[OldTulsan]

11:17 PM on 11/09/2010

http://www­.truthdig.­com/report­/item/a_re­cipe_for_f­ascism_201­01108/
Chris Hedges: A Recipe for Fascism - Chris Hedges' Columns - Truthdig

"...We believe, like the Spaniards in the 16th century who pillaged Latin America for gold and silver, that money, usually the product of making and trading goods, is real. The Spanish empire, once the money ran out and it no longer produced anything worth buying, went up in smoke. Today’s use in the United States of some $12 trillion in government funds to refinance our class of speculators is a similar form of self-deception. Money markets are still treated, despite the collapse of the global economy, as a legitimate source of trade and wealth creation. The destructive power of financial bubbles, as well as the danger of an unchecked elite, was discovered in ancient Athens and detailed more than a century ago in Emile Zola’s novel “Money.” But we seem determined to find out this self-destructive force for ourselves. And when the second collapse comes, as come it must, we will revisit wrenching economic and political tragedies forgotten in the mists of history."

[themuse]

10:37 PM on 11/09/2010

What economic structure will support 300 million people when there are only enough private sector jobs for one million? While this is an exaggerated figure, do the exercise because we are already over the threshold in that direction. Have you noticed that with the massive shedding of private sector jobs there hasn't been a correlating massive diminishing of products and services? That's because technology and outsourcing have reduced the need for a workforce that would employ the available wage earners. This problem is only going to worsen as Republicans block all viable paths to strengthen the economy and create jobs, as well as concerns of overpopulation and raping the earth bring us to the reality that overproduction and consumption will ultimately destroy the human race. Tax breaks for the wealthy don't create a corresponding increase in jobs because the wealthy-elite hoard assets.

[rtx47]

10:34 PM on 11/09/2010

Finally a very respected voice is saying what many others need to say. And what Progressive and Liberals on one side and Conservatives on the other need to accept. The unemployment and under-employement rate, is not solvable. This is related to several factors:

1. The marked efficiency, accuracy and skill of technology. Robots have replaced the need for majority of blue collar workers. Information and Computing Technology has reduced the need for middle level management.

2. With a 50% school drop-out (70% in inner cities) and an additional 25% failing to graduate from college, many in the next generation are not ready for skilled employment.

3. Modern society is shooting itself in the foot. Big growth industry in the last decade was tourism. With security concerns and high cost of transportation, tourism is stifled.

4. No longer can society create artificial problems so that we can spend the next several decades solving these concocted issues. Example is the whole period of the "Cold War"; and following that, the wars in the Midle East. So while America is worried about the Oil shortage and Mid-East stability, the BRIC countries are over-taking us, by addressing real problems like improving the standard of its people with a 7% -10 % growth rate.

We could spur demand within the USA by permitting the 12-20 million undocumented workers to come out of the shadows and spend their earnings to BUY cars, houses, appliances, furniture, etc etc.

[gerald4]

11:44 AM on 11/10/2010

You said that very well!

The USA is no longer the World Technology leader that the USA was until maybe the early 1970's. Asian countries are now are the technology leaders. The best & brightest students in the USA have pursued the more financially rewarding non-scientific financial careers, instead of educations that might have created technically innovative products that people in foreign countries might purchase.

Asia is now the primary source of the most advanced engineering and scientific talent because their public technical education process starts early and continues to produce a stream of highly qualified young people that is quite large compared to what is produced by the US undergraduate programs. American students will generally not endure the hard work and intense focus that is required for science and engineering degrees, especially since there is such limited financial rewards and respect for that effort after graduation.

Only if our US products are technically superior can we export those products in return for their foreign payment (gold and US dollars) to the USA. Unless we can somehow produce these products cheaper than the foreigners, foreigners will not pay extra for expensive products produced with US labor.

[Michael GE]

03:26 PM on 11/10/2010

Your second paragraph is something I ponder about. I mean, it's not like we don't have similar (maybe not that harsh) problems here. I guess we agree that getting a degree in engineering is harder than others. If you are successful, it pays well, but so do other, more easily obtained degrees (MBA).
It is only reasonably, logical that someone who has to pay (even if it, in the case of Germany, mostly costs of opportunity) will follow the path of least resistance.
Bottom line: If we want more engineers, let every potential candidate take a free shot at it and support him; maybe only on the condition that (s)he has to work for a US company for a decade in exchange or pay back a fee.

[OldTulsan]

10:12 PM on 11/09/2010

http://www­.counterpu­nch.org/li­ndorff1109­2010.html
Dave Lindorff: BS From the BLS

"Many Americans simply assume that the government and politicians lie when they are talking about things like cutting taxes, or eliminating waste. But somehow, we tend to believe official government reports about things like economic “growth” or unemployment rates, or even cost-of-living increases.

The truth, sadly, is that the government is lying about these things too.

Take jobs and unemployment. Right after the election, the Obama administration’s Bureau of Labor Statistics proudly trumpeted that the economy had added 151,000 new jobs in October. President Obama, about to head off to India, land, where many American jobs have moved for good, made it sound like maybe the American economy had finally turned a corner. The news led to a jump in the stock market and everyone breathed a sigh of relief, because finally, we had a number that was greater than the 100,000 new jobs that we have been repeatedly told are needed “just to keep pace with the new workers who join the labor force every month.”

Only the number is a fraud.

[snip]

A lot of this information can be found at an excellent website called Shadow Stats. It’s a site that should be visited daily by the hacks who write on business and economics for the corporate media..."

[gerald4]

11:45 AM on 11/10/2010

Figures do not lie, but liars can figure!