Transcript: Krugman and Stiglitz on the intransigence of the Neoclassicals, plus

Friday was jobs day, with the BLS reporting 171,000 new jobs on employment and a static 7.9 percent on unemployment.

This was seen as an encouraging report by most. We're highlighting it here at Demand Side because we think it shows the effect of the political business cycle, the practice of jinning up the numbers not by fraud or deceit, but by simply spending aggressively out of the federal coffers. It's happened since 1972, except for Jimmy Carter in 1980.

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The employment data reflects the GDP data we highlighted last week. We should expect a post-election slump, no matter who wins, and plenty of impetus for Congress to panic and cave on the austerity measures now contemplated under the title "fiscal cliff."

Of course, there are caveats. If the economy picks up strongly after the election with a Romney victory, it is because pigs can fly and the Confidence Fairy has materialized from the imaginations of the eager plutocrats. If the economy picks up strongly after an Obama win, it will be because people have learned finally to walk on their heads and see the new normal as normal.

ECRI, the Economic Cycle Research Institute, which has a new recession forecast on the table, said this:

Recession Evidence Obscured in Real Time

In recent weeks, several key coincident indicators have surprised the consensus to the upside, bolstering the belief that the U.S. economy has dodged recession. Even though the latest releases may show increases, earlier data have almost uniformly been revised downward, a reality largely ignored by many. For example, after revisions, there is a net gain of only 55,000 jobs in today’s payroll jobs report, which is itself subject to further revisions.

Demand Side is still bouncing along the bottom with downside risks. Like a dog on a chew toy, we cling to the idea that the so-called recovery had nothing to do with the business cycle and everything to do with massive public policy, a stimulus, $1.3 trillion deficits and zero percent interest rates. To ascribe the term "recovery," you must relate it to a business cycle. All real investment has been policy driven, or nearly all, from favorable tax treatments to targeted loan guarantees.

Now to Krugman and Stiglitz (transcript lost)

Intro Olaf Cramme (transcript lost)

Brought to you by (transcript lost)

Dr Olaf Cramme
Visiting Fellow
European Institute

Olaf Cramme is the director of Policy Network, an international think-tank based in London. He is also a member of the General Assembly of the Lisbon Council for Economic Competitiveness and Social Renewal, and co-founder and vice-chairman of Das Progressive Zentrum, a Berlin-based political think-tank.