Cramer on CNBC; Misconceptions
- Posted by Jeff Carter
- on March 25th, 2011
In the afternoon Jim Cramer and Erin Burnett do a little segment. It gives Cramer a chance to answer questions from Ms. Burnett and talk about things. Sometimes he is pretty funny, sometimes he is even right!
Today Cramer made a fatal intellectual error. He was talking about how Obama screwed up by attacking health care and the banks without paying attention to unemployment. Cramer said nations like China, Germany, and Brazil tackled unemployment. Check out this chart. I included the PIIGS, plus Belgium just for kicks. From the unemployment numbers, you can see one reason the PIIGS are in trouble.
Jim is correct, Obama did stimulus, health care, Dodd-Frank and a host of other things he had no business doing. He messed things up rather than fix them. It will take yeoman’s work to undo them.
German unemployment in February of 2009 was 7.2%. It’s 6.5% today. It’s lower, but that’s not a dramatic move. The dramatic move for Germany was from 2005-06 to 2008. They finally finished integrating the East Germans into their economy after the fall of the wall in 1989.
Brazil’s unemployment rate has ticked up the last couple of months. Not a trend for sure, but it’s ticking up, not down.
When we think about Chinese unemployment, in reality there is no such thing. Since they are a communist country, it’s impossible to be unemployed. By definition, they always run at full employment.
It’s also important to consider the standard of living. US wages are higher, and our standard of living is higher than anywhere else in the world. It is crass to say, but our poor have it better than a lot of the middle class in places like China, Brazil and other nations. What sounds romantic to your ears and dreams falls quickly to earth when you find out the reality.
I had an acquaintance that defected from behind the Iron Curtain in the early 1980′s. He was an athlete, and saw what life was like on the other side of the wall. He told me that in his country, everyone always had a job. They all collected a government check. They went to an office every day. Of course, they didn’t do anything but smoke cigarettes all day, but they were “employed”.
China is different because there is production, but they are still a command and control economy. They operate at full employment. I always get nervous when people in the US look fondly at the Chinese model. The reason that they can get by with that model is there are no human rights, no rule of law, no property rights. It’s what the Communist Party says.
Free markets can be extremely messy. They can take some time to operate. But, if not influenced artificially, capital is always allocated in the most efficient manner. Prices and output are at their most efficient. The upside is they work best in a society like the founder’s envisioned.
China can keep it’s growth. I’d prefer my freedom.
Brazil can keep it’s growth. I like my standard of living compared to theirs.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)
Tags CloudAccounting Aerospace and Defense Ask an Expert Automotive Baldur von Schirach Brad Keywell Climate Change Skeptics Conservative Political Action Conference Design Directories DV entitlements Environment Fantasy sport Founding Fathers Free Stuff Gabriel George Clooney Houston Illinois is Broke Illinois taxes Islamic terrorism Jake Mintz John Lennon Labor Learning Merlot Obamanomics Ohio Pajamas Media Peggy Noonan Populism Price Transparency Question Rainn Wilson Ron Ron Paul Seed money Sports Startup America Suicide Television network Transportation Ultraviolet Wkilleaks
Becker Posner Blog
Ben Horowitz Blog
Betting the Business
Black Line Review
Blue Sky Innovation
Both Sides of the Table
Business News Network
Chicago Booth Graduate School of Business
Cooler By The Lake
Daily Economic Release Calendar
Doug Ross @ Journal
Economics of a POW Camp
Foundation for Families
Garden and Gun
George Stigler Institute
Good Beer Hunting
Great Food In Chicago-Steve Dolinsky
Hyde Park Angels
Illinois College of Business
John Taylor's Blog
Legal Issues in Angel Funding
Macroblog-Federal Reserve Bank of Atlanta
Microbrews in Chicago
Mike And G
Milton Friedman Institute
National World War Two Museum
Notes From Underground
Ronald Coase Institute
Senate Banking Committee
The Big Picture
The Clubber Fund
The Daily Crux
The Grumpy Economist
The Jack B Show
The Minimalist Trader
The Musings of The Big Red Car
The Polsky Center
The Streetwise Professor
Tough Love Marketing
US Federal Reserve Bank
US House Financial Services Committee
World War Two Blog