Relevant and even prescient commentary on news, politics and the economy.

How dry I am…

By: Divorced one like Bush
No body knows, how dry I am. I went home, I rang the bell, my wife came out and gave me hell.

Juan posted a link to this paper: OPEC Pricing Power, The Need for a New Perspective

Besides the issue of how oil is priced, and the relationship of the futures market (yes, it is related to the real thingy) there are some numbers presented as to future expected oil production via IEA.

In an exercise which focuses on Middle East and North Africa (MENA) oil and gas resources, the IEA (2005) projects in the reference scenario a rise in MENA oil production from the 2004 level of 29 mbd to 33 mbd in 2010 and 50 mbd in 2030. In this scenario, Saudi Arabia will remain the largest supplier increasing its output from 10.4 mbd in 2004 to 11.9 mbd in 2010 and over 18 mbd in 2030.

MENA was projected to pump 50,000,000 barrels per day in just 22 years from now.

From this paper: Analysis of Crude Oil Production in the Arctic National Wildlife Refuge May 2008

In the low and high ANWR oil resource cases, additional oil production resulting from the opening of ANWR peaks in 2028 at 510,000 and 1.45 million barrels per day, respectively.
Between 2018 and 2030, cumulative additional oil production is 2.6 billion barrels for the mean oil resource case, while the low and high resource cases project a cumulative additional oil production of 1.9 and 4.3 billion barrels, respectively.

So, let us apply some Angry Bear thinking. At the pumping rate in 2030 of MENA, under the best of realizations of ANWR (4.3 billion barrels of oil waiting for our binge), MENA could pump it dry in 86 days! Three months. A lousy 3 months.

But you say: Hey bartender, Hey man, looka here
In 2003 they say we have 59,090,000,000 barrels of oil in the lower 48 and off shore. With ANWR’s best reality, that gives us a total of 63,390,000,000 barrels of oil. Billions and billions of barrels.

A draw one, draw two, draw three four glasses of beer… at 50,000,000 barrels a day we can drink for 1267.8 days. That is 3.47 years. That’s it. No more home brew. At our rate of use, 20,687,000 barrels/day, we’re dry in 8.4 years. That’s only about 2/3rds of the amount of time I keep a vehicle. I won’t be able to wear out my car!

Still not convinced that drilling is not much of an answer? Then consider that in 2005 the US drank 7,500,000,000 gallons of beer. There are 42 gallons in a barrel of oil. That means the US drank in that year 1,785,471,428.6 OBB (oil barrels of beer). Thus, at the rate we drink beer, we could hit the bottom of the barrel in 35.5 years. If EIA’s highend is correct, we can drink ANWR beer for 2.4 year. If not, then we’re going to be jonesing in just over 1 year.

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Senator Obama chooses Jason Furman econ advisor

By: Divorced one like Bush

From this story at Common Dreams comes the news that Senator Obama has chosen Jason Furman as an economic advisor. The story notes Mr. Furman’s fame for his defending of the Walmart model. The one that states Walmart is helping the less fortunate. I don’t buy it in the big picture scheme of viewing. In fact, we at AB have had this discussion and I even posted a link to a report from the EPI which noted not everything related to ones financial well being can be bought at Walmart. Frankly, there are some very big items that are not on Walmart’s shelves that take up a large portion of ones budget.

He has held a good position at the Brookings. Note that bit about director of economic policy for the Kerry/Edwards campaign. Not to keen on the Hamilton Project though:

The offices belong to the Hamilton Project, a small think tank created by Robert E. Rubin, Bill Clinton’s Treasury secretary and key economic adviser, and former Treasury deputy secretary Roger C. Altman, who would be a front-runner for the same job in a new Clinton administration.

Is this the concession the Clinton/Blue Dog group was looking for? The DLC still keeps control of the money issues? This article suggests some recent Hamilton Project influencing.Do we really need Chicago School lite? Are we that timid that we couldn’t try another school of thought? Now that would be “change”.

Then I read this in the Common Dreams article:

One economist who has disputed some of Mr. Furman’s findings on Wal-Mart said the disagreement shouldn’t disqualify him. “That’s small potatoes. Jason’s economic agenda goes way beyond that,” Jared Bernstein of the Economic Policy Institute said. “That’s not anything close to a deal breaker.”

Well ok? If the EPI can say there is more to this young man than Walmart, I need to go looking. I found this from Mr. Furman’s article on corporate taxes:

“We should consider tax reform in the classic 1986 mode: lower tax rates and broaden the tax base by limiting special exemptions. Both halves of this classic equation have the potential for helping the economy by eliminating the perverse incentives to invest in tax-favored activities rather than in more economically productive activities. “

Alrighty, there is more to his thinking. He relates our health care problems to the tax code also:

Not only do we spend more than any other country on health care, nearly 50 percent more per capita than the second-highest-spending nation, but citizens in 28 other countries have a higher life expectancy and 33 other nations have lower infant mortality rates.

If this were a government-run health care system, the voting public and policymakers would be up in arms. Yet, perhaps because health care is largely perceived as a private-sector concern, there is relative quiet: while voters tell pollsters that it is a top priority, there appears not to be comparable political pressure for serious reform or any fundamental change in the government’s involvement, either in the provision or funding of health care. This is in part because much of the federal government’s involvement with the health care system is through the hidden backdoor of the tax code. An importantprinciple for modern progressives is that when the government has to intervene in the marketplace, it should not prop up failure. Yet the federal government is, in fact, deeply involved in perpetuating the current “private” health care system and all its flaws, spending approximately $200 billion annually in subsidizing employer-provided insurance. It is the single biggest subsidy in our tax system, more than twice as costly as the mortgage interest deduction. The only government programs that cost more are Social Security, national defense, and Medicare.

Interesting perspective…yes? But, I’m not so sure he is correct with the solution, though I can now see why Senator Obama has put him at the table:

In fact, if we turned our irrational health tax subsidies right-side up–by curbing subsidies for higher-income workers and those with more generous health insurance plans–we could raise tens of billions of dollars annually, money that could go toward increasing access to health insurance. Taking it a step further, we could scrap the current deduction altogether and replace it with progressive tax credits that, together with other changes, would ensure that every American has affordable health insurance.

Not exactly a Mrs. Edward solution if I have read her correctly.

This person, Mr. Furman seems to fit well with Senator Obama’s other econ advisor, Mr. Austan Goolsbee. I think we can now start making some educated guess on what to expect for proposed solutions to the shift of income share to the top 1%. You know: It’s the economy stupid, Show me the money, declining real wages, consumer economy with little to spend, (add your’s here…). We’re going to try a new version of trickle down which has some form of tax code tightening, but no direct social policy influencing. Social influencing, like say, we use the tax code to make it more profitable for the company to pay the help as oppose to paying the very top management and shareholders.

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Buffet’s Import Certificate idea. What about the people?

By: Divorced one like Bush
Update: Link for Import Certificates fixed

Via Howard Richman’s blog comes this by idea by Buffet: Import Certificates. You have to read down a ways before he gets to the idea.

“We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties — either exporters abroad or importers here — wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.”

Carbon Cap anyone? Think Walmart is on the side of this plan? First of all, what is it with this new approach of solving our externalities via the development of an entirely new market. Have we not had enough with Milken’s Junk bonds, Secure sub prime mortgages, greenmail, etc? Is the creation of new trading cards of stated value the equivalent of polishing a rock and creating a wanted jewel? Maybe so for a “service economy” that makes money from money. You know… have a hammer, everything is a nail.

I’ll admit I’m intrigued by this Import Certificate thing. (But then, I’m intrigued by the APT tax concept.)Seems to capture the benefits of a tariff without having to actually choose (be responsible for the decision). Now that’s American!

How are they to be valued initially? Is this approach to solving problems that are the result of using money to smooth the relationships of people not just another form of printing money by the government? I realize bartering can not take us everywhere we would like to go with our social development, but is this concept just throwing money at the problem?

Buffet notes negative issues. One, a rise in cost to the US consumer. I have a few concerns that piggy back on his.

Like: 1. The certificates being traded on the open market, and the resultant speculation pricing?
2. What would assure that the certificate values do not become the enabler of American junk? Like the US auto industry was back in the 70’s.
3. What protects the consumer from the ability of a US company to gain all the benefit of improved exporting? Are we to just assume that the increase in world demand for our products will increase the demand for labor such that pay for labor will rise? Didn’t happen early on in our history. It took the bloodied rise of unions to force it.
4. What is to stop a company from setting up shell corps in the US, do some fancy booking and benefit from exporting to its self? Kind of like the transfer payments for tax evasion. Can you say Corporate Welfare?
5. Can this work in a global trade system that has let a new virtual nation come into existance: The United Corporations of Global. Does not a nation actually have to have possession of it’s corporations for such to work for the benefit of the nation?

Frankly, I think some of these issue will be issues of the Carbon Cap and trade approach also. They are approaches that address an externality, a single issue solution, but continue to fail to address the most inclusive of issue for all of us (citizens of the world): monetarily benefiting from trade such that our lives are freer to pursue life, liberty and happiness. To steal a line: Show me the money.

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Remember the Vega response? It’s a philosophy problem.

by DolB

After reading Tom Bozzo’s post via Vtcodger, I was inspired by the comments about bad management.

I’m not confident that the issue of the Big 3 management is the result of stupidity as much as it is from philosophy. Part of the bitching of the Big 3 in the first crisis was do to the need to move from focusing on money to focusing on a solution to a need: personal transportation. We got the Vega with unlined aluminum blocks and mickey mouse brakes. Infact, if you ever saw the casting of the engine, it looked like it was 1/2 a casting of the small block V8.

However, Japan’s business approach appears to be an extension of their life philosophy. Thus, Toyota brought out the Prius in Japan in 1997. 4 years after the creation by President Clinton of The Partnership for the Next Generation of Vehicles. This was 1 year after Toyota announces: January 16, 1992 – Toyota Motor Corporation (TMC) announces the Earth Charter, a document outlining goals to develop and market vehicles with the lowest emissions possible.

They set out to solve a need. We instead got a endless talking point that the purpose of a company is to make a profit. Well, the Big 3 made their profit. Now what?

And that PNGV program? “The 1994 PNGV Program Plan calls for a “concept vehicle” to be ready in about six years, and a “production prototype” to be ready in about ten years.”

Just a little late in their time planning, wouldn’t you say? Toyota was out 3 years post this report in their country and world production 2 years before the PNGV program called for a “prototype”! And Toyota didn’t need to be sweet talked into it. But we did spend some money:

“In FY1995, about $308 million was appropriated for ongoing PNGV-related R&D at eight federal agencies. Of this total, 88S went to three agencies: DOE, Department of Commerce (DOC), and National Science Foundation (NSF). Industry is spending about $100 million during this early, high-risk part of the program. For FY1996, the Administration requested $383 million. The House approved $228 million, a cut of $80 million or 26% from the FY1995 level, including zero funding for two agencies. However, the Conference mark is $312 million, which is nearly even with the FY1995 level, but is $71 million or 19%. lower than the Administration request.”

But, let’s speed forward.

By 1997, participants had settled on the specs of the “super car,” as it became known: the sedan would be a lightweight, diesel-electric hybrid. (Diesel engines, because they use a higher compression ratio, consume less fuel per mile than gasoline engines do.) By 2000, the Big Three had all produced concept cars, which were unveiled with much fanfare at the North American Auto Show, in Detroit. G.M.’s car, which was called the Precept, came equipped with two electric motors, one mounted on each axle. Ford’s Prodigy featured an aluminum body and rear-facing cameras in place of side-view mirrors, and the Dodge ESX3 was made in large part out of plastic.
The concept cars were wheeled out, then wheeled away, never to be seen again.

You do know the story of the EV-1?

In January, 2002, just months before the prototypes of the vehicles were supposed to be delivered and after more than a billion dollars of federal money had been spent, Energy Secretary Spencer Abraham announced that the Bush Administration was scrapping the project. When he delivered the announcement, Abraham was flanked by top executives from the Big Three, at least one of whom—G.M.’s chairman, Jack Smith—had stood next to President Clinton when he launched the program, eight years earlier. Abraham explained—and the auto executives seemed to agree—that the program had been based on a fundamentally flawed premise. The future of the car didn’t lie with diesel hybrids or any other technology that would allow vehicles to get eighty miles to the gallon. “We can do better than that,” Abraham declared. The Administration and the automakers, he said, were undertaking a new, even more ambitious venture, called FreedomCAR. The goal of this project was to produce vehicles that would run on pure hydrogen.

And thus was born the fable of hydrogen. Great! But what about the issue coming up like right about now? Toyota saw it. They solved it and I bet they already have something more in the works for the “more ambitious venture”. You know what else Toyota was doing in 2002?

Toyota announced they were now making a profit from the sale of each Prius. The success of hybrids had now become apparent.

How’s that stated purpose of a company working out for ya now? What’s the solution now? Another new purpose for a company? How about: It’s no longer to make money, it’s to not have it taxed away. That’s how the stock holders will get paid.

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$10,000 limit. Can’t fill the tank

Seems another sign of the new era of banking fraud awareness comes from the price of gasoline/fuel. You can’t pump more than $75 worth.

The $75 limit “ensures merchants and customers are protected from fraud,” says MasterCard spokesman Tristan Jordan.

Visa and Mastercard are worried about you and the station getting ripped off. Really? Interesting though how the station owners say it is the policy of the card companies but Visa said it’s the fault of the owner.

Visa and MasterCard have no immediate plans to go higher. “It’s something we always look at,” Wilke says.
Visa raised its pump limit from $50 in April, but $75 isn’t keeping up with gas prices. At $4 a gallon, $75 buys 18 3/4 gallons. A 2008 Toyota Sequoia SUV’s tank holds more than 26 gallons, a Chevy Avalanche sport pickup totes up to 31 1/2 gallons, and a 33-foot or longer Winnebago Adventurer RV hauls 75 gallons.

Of course there is a solution. Swipe it twice, or in the case of the RV, 4 times. Too much? Then they offer that you can run your card inside. Frankly, I’m not sure what difference there is in protection if you swipe the card inside. The card company is still going to be on the hook if the cashier doesn’t ask for ID.

Where are you goin to
What are you gonna do
Do you think that it will be easy
Do you think that it will be pleasin, hey

Stand back, whatd you say
Stand back, I wont pay
Stand back, Id rather play
Stand back

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Unused oil drilling permits: 9300

Watching Cspan at lunch of the House debt on taxes and energy Rep Emanual stated there are currently 9300 unused oil drilling permits in the US. The counter to the statement was from Rep McCrery: There must be a reason for them being unused.

Yes, obviously if they are unused there is a reason. Any guess? Of course, that they are unused McCrery noted is the reason why we need to drill in ANWR and all 3 coasts; East, West, Gulf. Rep

McCrery seems to imply here that the permits are unusable. Well, if they are unusable, then why are they still open? Why have they not been returned as unusable and thus the ares of permit removed from the list of viable drilling property.

Fascinating. Being that we are not opening up any new refineries which is blamed on all sorts of things (usually those tree hugger types) where would all this oil, whether from the republican wish list of holes in the ground or the current 9300 ok’d potential holes in the ground be refined? If not here, then we are exporting crude. Will that offset our import costs?

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In the eye of the beholder

Came across a couple of videos. This first one is an issue of perspective on the thought of what is terroism or what is a terroist act.

This second one is just plain funny (at least to me). It spoofs on the Annie Oakley comment by Senator Obama.

On the economy side of things using my GFP (gross flower production), things were not as good as last year. What started off as a year with a bang, is now looking to be equal to last years numbers. We were up 21% end of March. End of April we were up 4.7%. As of Mother’s Day, 2.6% on the year. Interestingly, looking at credit card use for the holiday months Valentines was up 23%, Easter was up 13% and now Mother’s Day is down 27%. This is the shift I saw starting last August. But, cash sales are up for May 33%. They were up for January and February, but cash sales were down both March and April.

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Best use of the rebate check is…

How to use Your IRS Rebate check…
As you may have heard, each of us will be getting 
a tax rebate check to stimulate the economy.
If we spend that money at Wal-Mart, all the money will go to China .
If we spend it on gasoline it will go to the Arabs. 
If we purchase a computer it will go to India  
If we purchase fruits and vegetables it will go to Honduras & Guatemala.
If we purchase a good car it will go to Japan.
If we purchase useless stuff it will also go to China.
And none of it will help the American economy.
We need to keep that money here in America .
The only way to keep that money here at home is to spend it at
Yard Sales , since those are the only businesses left owned by Americans !!

There is another version suggesting one use it to indulge their risque side. With that, is there some truth to this suggestion? Is the spending of the money in some place other than a small business like my flower shop, or a yard sale just making the rebate another channel for money to move out of the government (us) and into the hands of the few leaving us to also pay the taxes…some day?

If anything, buying used or at a yard sale will reduce the consumption of more resources. I mean, I love Craigslist.

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You, Me and China make Three, part II

Back on April 20th I presented my introduction to a book by Will Hutton: The Writing on the Wall.

First, the book is 334 pages. The list of references 39 pages. There is a lot I could cover. But this is the Angry Bear which I view as being about US(of A). It is this part of Mr. Hutton’s writing that caught my attention. As much as I am interested in China’s life influencing ours, I am more interested in understanding what happened to us.

I presented his concept of values coming out of the Enlightenment as being the basis for what the USA (as a stand-in for referencing Western processes) had achieved and what China has to move more toward. It is not that China must model us exactly, but that it’s current structure is limited. It needs to be more democratic based on values from the Enlightenment. Mr. Hutton presents the democratic Enlightenment concepts as four: “accountability; representativenesss; respect for the rule of law; and the capacity, through free speech, for debate, exchange, and interaction.”

As much as the book looks at China and how it does not meet these concepts sufficiently to allow it to grow such that it will meet the needs of it’s people, I want to focus on his view of us. In this case, the USA specifically. I believe he points to the USA because it was the leader in the world, as he presents the case, for manifesting the democratic Enlightenment concepts. I believe, his view of the Enlightenment is in agreement with Wiki’s presentation:
The Enlightenment is held to be the source of critical ideas, such as the centrality of freedom, democracy and reason as primary values of society. This view argues that the establishment of a contractual basis of rights would lead to the market mechanism and capitalism, the scientific method, religious tolerance, and the organization of states into self-governing republics through democratic means. In this view, the tendency of the philosophes in particular to apply rationality to every problem is considered the essential change.

The discussion of Enlightenment begins with free trade and that the USA is “not a natural candidate to support an open world trading and financial system…” We benefit, but we are “ambivalent”. “An open trading system tempts every country to pursue strategic trade policies that are much more mercantilist in their rationale…All genuflect to the rules-based openness of the trading system as regulated by the World Trade Organization. But they believe in it more because it is the means to secure their strategic, mercantilist aims than because of any desire to create gains in which everyone would share.”

Mr Hutton is pro free trade. He makes a case that America’s growth was less do to protectionist positions taken early on and more the result of a growing population with access to free land. Space and ambition were the key. As the coasts were joined, we moved to substitute foreign trade for the loss of our frontier. “The aim was not to create an overseas empire but to export the American idea…” unlike the European expansionism. And as expected, he flatly states that free-trade is not the cause of the condition we find ourself in currently. Though he thinks both sides, one portrayed by Lou Dobbs and the other by Friedman need to be “cooled down”. They are both “vastly exaggerated”.

The source of our mis-thinking is found in how we view liberty. “Liberty, in the American narrative, is the sun under which everything flourishes. Liberty permits individuals’ hard work, courage, and application to produce wealth and happiness. Government should not get in the way…Liberty and the American dream are linked…The great conservative counterrevolution …has been grounded in its brilliant capacity to exploit these cultural icons to support its own cause.”

But this is an error of our self perception. It is more correct to view liberty as a goal within “…a highly sophisticated Enlightenment political infrastructure.” Look at the United States…and you will see an economy and society characterized by pluralism, diversity, and investment in individual capabilities.”

He bolsters this view by presenting Alexis de Tocqueville’s work about America. “Public engagement and never-ending argument leavened what otherwise might have been a culture of egoism…and transmuted it into a culture in which egalitarianism and individualism enriched each other. Self-interest was not only a matter of bettering oneself; it was also a mattter of ensureing that there would be a vigorous public life and opportunity for others…The same impulse–wanting the best for oneself and for others— prompts much of American civic activism.” Our liberty “always included conceptual egalitarianism, which provided the tension between the ambition and appetites of the propertied rich and their accountability to society.” “This is not the egalitarianism of income or opportunity; rather, it is the equality of self-esteem, self worth and possibility…there is no obstacle of title, birth, accent or social rank…”

It make you feel proud, does it not? Unfortunately he notes we are losing it through “neglect and willful disparagement of their importance, in particular by American conservatives.” We are losing the “fecund interaction” of markets and the price mechanism with the Enlightenment infrastructure and resultant culture. Mr Hutton states it was our genius.

This is where I will go next. What has changed. I believe it was my very first post via an invite from Cactus (he posted it for me) that I made the statement that we had changed. We no longer were making money as we had. We no longer were focused on what we use to. It was more than just tax rates that changed in the Reagan years.

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The Longest Recession Ever!

The other day Spencer posted a chart that Cactus had sent and then Cactus posted the link to the data. After looking at the data, and considering the question being asked: Are we seeing a recession? I thought, maybe looking at just median weeks of unemployment or number of unemployed is not going to capture the true picture.

During a recession or in determining a recession would not the amount of idle labor be more of a factor? If we have 5 of 10 people unemployed for 5 weeks, is that worse than 6 of 10 unemployed for 4 weeks?

For this chart I used average weeks unemployed times the number of unemployed looking at the first day of the first month and the first day of the seventh month to come up with a factor we can call Person Weeks Unemployed: PWU.

As you can see, our economy has been performing worse as time goes on. The Y axis number need to by X1000.

We are leaving a lot of work on the table and the swings have gotten larger. Larger swings in labor sitting idle is the opposite of what we are praising in the GDP swings. And, note when the big swings started, right when we de-coupled the rise in productivity from the rise in wages: 1974 Up until that time, the lost labor fluctuates around the 50,000 mark. During the first oil shock, we hit a new high of 125,000 person weeks. No wonder the mood sucked during Carter’s years. At least it came back down to the upper end of the range we had been in since 1958. Unfortunately, since we decided to focus on money (yes Reagan) we seem to waffle around 125,000. A full 75,000 person weeks of lost work.

However, what is more interesting is the peaks of PWU in relation to the official recession dates.
Recession 11/48 to 10/49 but the PWU peaks 1/1950 3 month delay
Recession 7/53 to 5/54, PWU peaks 7/1954, 2 month delay
Recession 8/57 to 4/58, PWU peaks 7/1958, 3 month delay
Recession 4/60 to 2/61, PWU peaks 7/1961, 5 month delay
Recession 12/69 to 11/70, PWU peaks 1/1972, 14 month delay
Recession 11/73 to 3/75, PWU peaks 1/1976, 10 month delay
Recession 1/80 to 7/80, PWU peaks 1/1981, 6 month delay
Recession 7/81 to 11/82, PWU peaks 1/1983, 2 month delay
Recession 7/90 to 3/91, PWU peaks 7/1992, 16 month delay
Recession 3/01 to 11/01, PWU peaks 7/2003, 20 month delay (updated to correct math error)

Some may say: Hey, Reagan did good! But, if we ignore the blip of economic reprieve it is 30 months from the end of the first recession to the peak of PWU after the second. And he set it good, going from a previous high of 125,000 to 223,000!

So what do you think? I think that what matters to people regarding a recession is whether they are working and not when the government states the turn-around began. Thus, the peak of a recession is in the eye of the beholder. If you’re a person earning money from labor, a recession these days can last a very long time. This data would suggest that what we are seeing in the Spencer post is not a decreased risk but a lull before the storm. One other thing. It appears the Republicans fail again. As a group they have the longest turn-around to seeing a reduction in lost labor. In fact, the recent Bush years could be considered the longest lasting recession ever based on my PWU metic.

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