Floydian Theory on Okun's Law-THIS IS AN IMPORTANT STOCK READ
The economist Arthur Okun first formulated the theory that says "when the economy grows, it produces jobs at a predictable rate, and if it shrinks, it sheds them at a similar regular pace.
Joshua Ramo has an excellent article in Time Magazine. Cut and paste to your browser and really study, as Mr. Ramo explains the unusual predicament we are in, in that the economy is growing, but unemployment is not shrinking.
http://www.time.com/time/business/article/0,8599,1921439,00.html
As you complete the article, and think out Okun's Rule of Thumb, we are perhaps truly in a shift within our nation, with more unemployed than ever before, and for a much longer time.
As a business consultant for many years I could visually watch the layers of management at firms that were unnecessary, and that many companies were simply not productive with their employees.
We all know this. With the Cash for Clunkers it was 4 for 5 American cars clunked in, and 4 for 5 new cars being bought Japanese.
Walmart is China, and doing well, so it appears we are not willing to stuff. Trade tariff discussions are already starting.
I believe Obama's stimulus package has held us steady so far, and that the market is now naturally producing its Fib retracement , some on good news, some on hope, but most of our rise has been
as pre-indicater of what the economy should become. The market precedes the general economy. The issue of healthcare will be resolved, in a way I think that will define really what kind of nation we are, one led by anger and fear tactics, or one that can be bi-partisan and represent all the people, without the lobbyists that lead our world.
Wall Street has been warned. Regulations are not yet in place, and many schemes are already being hatched. We have to watch for this, as many predict there are more "hidden numbers" that will become clear
as the high unemployment hits the GDP, and hits our taxes, as there will then again be more subsidies. Stimulus some believe may need a second phase.
My point in Okun's "Law" is that his extraordinary "obvious" theorem "should be" right, but some tides are turning, or we are modifying the theory.
