From: GCTHORNE@idbsu.idbsu.edu ("Broward "L.A." Horne")
Subject:      C-SPAN & 1929 !
Date: Sat, 07 Nov 92 10:48:04 MST
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      On Friday, Nov. 6, C-SPAN broadcast the "Joint Economic Committee"
  hearings on the "October Unemployment Figures".

      First of all, I would really, REALLY suggest that you see this one
  for yourself.  Seeing is believing!  The following is my interpretation.

      Highlights:

  Part I -  The Unemployment Figures

      The numbers are bogus.  The guys who made them know it, and now
      Congress knows it.  The unemployment figures for 1992 will probably
      be revised to show virtually no job growth.  Thrill to the faces of
      economists who are baffled about why their interpretations were
      incorrect.  Be amazed by the inquisitive, incredulous chairman
      as he asks the right questions.  Be chilled by the guilty and
      concerned faces.

                             Aggregate of               THIS
                             Previous Recessions     "Recession"

      % of jobs regained
   after recession ends           189%                   14%

   % of people permanently
   laid off                        56%                   88%
  ----------------------------------------------------------------------

   Duration of rising short-
   term unemployment after
   end of recession                2 months

   Duration of rising long-
   term unemployment after
   end of recession                6 months

    In other words, overall unemployment increased for an average of
    SIX months after recession's end.  For this recession, which officially
    ended in April of 1991, we watched unemployment rise from 6.6% to
    7.6% over the past EIGHTEEN months.
   -------------------------------------------------------------------

   Range of "% of jobs regained" which make up the above aggregate -

      Low - 97% ( in the latest recession, which supports Kondratieff
                   long wave theory )

      High - 300+%

   "Actual uneployment rate"
   counting discouraged, part-
   time workers, etc                 at least 11% now

 ***************************************************************************

  Part II - Survey by the American Management Association

      This is the survey which recently reported that 25% of U.S.
  companies plan to layoff in the first half of 1993.  The survey
  includes 7,000 companies which account for 25% of the U.S. worforce.
  Almost all of the Fortune 1000 are included in this survey, and there
  is an acknowledged biasing towards large companies that are manufacturers
  ( versus financial or service oriented ).  This is the 6th year of the
  survey ...

      This is the survey's highest percentage so far.  The previous
      record was 22% and appears to have been for 1992.

      Remember that 25% of the companies plan layoffs for the FIRST half
      of 1993.  From the previous 5 surveys, the FIRST half layoffs are
      usually 1/2 to 1/3 of the number of SECOND half layoffs.  In other
      words, if this survey holds true, there will be a BIG increase in
      layoffs in the second half of 1993.  This, in addition to layoffs
      in the first half of 1993 looking to set a record.

      63% of companies who have downsized historically downsize AGAIN
      in the following year.  The average downsizing involves 10% of
      the company's workforce.

      The current wave of layoffs PRECEDED the recession.  Think on this.

      Only 43% of downsized companies experienced significant financial
      gains.  24% incurred financial losses.

      Successive layoffs result in cumulative effects.  For companies
      embarking on their second, or third, " downsizing ", morale typically
      " disintegrates ".

      Of the current planned downsizings, 63% are a result of recessionary
      pressures. Over a third are structural, i.e. they would have occurred
      regardless of the economic condition.  Think on this!

 ****************************************************************************

  Part III - Economic Consultants

       Comments were made by several economic think-tank consultants.

       Forecasted 1993 Federal Deficit, assuming a $30 Billion fiscal
       stimulus -

                              $381 Billion

       That is a THIRTY PERCENT increase over 1992!  For a stimulus which,
   in the general opinion of the economists present, would be *measurable*
   but not that *significant* in context of an almost $6 trillion economy.

         AND.  The fiscal stimulus effects would probably not be felt
   for a minimum of six months, more likely for a year.

        The U.S., Europe, and Japan are experiencing " unique "  economic
   situations.  Germany is experiencing stagflation, with a target of
   2% inflation versus an rate of 3-4%.  German rates cannot be expected
   to drop significantly.  Japan has an unprecedented 1% growth rate and is
   " fiscally fragile ".

        The U.S. can, at BEST, look forward to a growth rate in GDP of 2%.
   Implied here was a slow choking off of even the 2% rate by the Federal
   Debt.  In the words of one, this economy is " unlike anything I have seen
   before ", " unlike any post-war recessions ", and the best characterization
   that can be made is that it resembles a " 1930s type " economy.

        As for fixing the problem, the best solution does indeed appear to
   be infrastructure spending, in that it MAY increase GDP over and above
   the costs expended.  But there is SERIOUS doubt here.  One study was
   cited, from the late 70s, that concluded that infrastructure spending
   by the government was a break-even affair, with no impact on GDP,
   while transer payments resulted in a net NEGATIVE effect on GDP.

        The direction here is clear.  The historical relationships
   are clear.  Racism is re-emerging in the U.S., U.S.S.R, Germany, etc.
   Trade wars are impending and quite frankly, in my opinion, inevitable.

        I believe there is a CLEAR similarity between 1992 and pre-WWII.
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