OT: A lot of times I'm skeptical of Mish because he always seems to know exactly what the future holds, but I think his post today on the Fed Uncertainty Principle is well worth reading.
The idea that the Fed is basically creating destructive feedback loops within the economy that wouldn't exist naturally, despite presumably having good intentions, I think is no longer some crackpot theory in light of recent events.
ah yes, the mere threat of a Democratic President is enough to crash not only the entire US economy but also take out the Spanish housing market. It may also be behind the disappearance of bees, bats and frogs and the collapsing of Antarctic ice-shelves.
todays hearings are important b/c they will reveal the bankers for who they are. greedy, reckless, self interested elitists who have bankrupted the system and brought us to where we are.
as average joe and i have pointed out, the bankers will try to have it both ways this morning. in order to justify their bailout of Bear they have to admit how dire the situation really is. BB yesterday said how "fragile" the financial system is today.
Paul's convoluted pt was that big business and gov't are joining hands to screw the masses. his last remark was a shot over the bow and i paraphrase: "maybe we should let the markets decide interest rates".
Just as i was about to make some snide comment that I was Jonesing for my Thurday morning unemployment chartporn, CR comes through again.
One reason for the coincident and/or lagging nature has to do with the casual economy sector and employment mobility. The jobs most likely to be overlooked in these surveys are the first to go thus it isn't until after significant job losses that the people being counted are affected by conditions. The second factor, a highly mobile workforce, will be interesting this time. Many people who would normally relocate for job opportunities find themselves under "house arrest." I predict they will show up as a spike in claims shortly.
The Bloomberg.com story characterizes the unemployment numbers as "unexpectedly higher".
They are "unexpected" (winknudge) if you're a professional shill for the hedge fund industry who keeps calling for a rebound in the economy and stocks every day of every week.
Regarding feedback loop. That's the crux of our over-leveraged asset inflation economic model. In the end, short term stability results in systemic failure.
At this point I am less concerned w/ indicators that interrelationships. I would be more sanquine about our economy if I were confident that one bad sector wouldn't bump another which would ...
CR said: "Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise."
Right, there's nothing magical about the 350k level...but you included it, anyway, implying that there was.
And there's nothing to be gained by adjusting this indicator for population growth, because jobless claims of 350,000 with a non-farm payroll number of 138 million (current) is the same as 350,000 when the non-farm payroll number was 5 million lower at 133 million in Feb. 2001, immediately prior to the last recession.
Or when non-farm payrolls were 12 million less at 126 million (at the outset of the 1990-91 recession).
Carefully-chosen data for a carefully-drawn chart using carefully-chosen assumptions doesn't make an argument true, however convincing it might seem, and I believe we're all going to see that as the year goes on and new data becomes available.
Rob Dawg said: "...Let's move on without the unnecessary sophistry."
What you refer to as "sophistry" is simply looking at the data presented from a neutral point of view. If you don't think unemployment is being measured properly, then you should be giving CR a hard time about not providing accurate data, instead of me for simply using the data he provides.
"Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise."
As others have said, I think we should adjust for total employment numbers.
Seb,
This is your sophistry I was commenting on: Right, there's nothing magical about the 350k level...but you included it, anyway, implying that there was.
You not only commented on the non-magical nature of 350k as well but completely reversed the meaning of CR's codicil just to score a worthless debating point.
Now you go after me for objecting to this behavior.
Instead, answer the question. do we have a deal? can we adjust the 350k for population AND return to the 1990 methodology for calculating the unemployment rate?
Roughly the pre-Clinton U-3 would be 7.5% and the reference 1990 350k population adjustment would be (234,243,963 x 74.5%) population in workforce divided by (234,243,963 x 69.2%) people employed = 1.077 multiplier or 377k low end and a pure raw population adjusted 418k high end.
I may not agree 100% with everthing you post but here is tidbit...I just counted all the current job openings nationwide at my trucking co.
A shade over 500.
Try finding a CDL with a hazmat endorsement that has no major moving violations and only 1 minor in the last three years...BTW this is for insurance,not gubmint regs.
When our volume drops 20% like during the dot com bust and we have all open positions filled I will start to panic then.
"Labor related gauges are at best coincident indicators, and this indicator suggests the economy is in recession."
The Conference Board and the people who put together the venerable and still useful LEI would not entirely agree with that. Claims are included as one of the components making up the Leading Index. Surprisingly (or maybe not), the much more widely watched and reported on non-farm payrolls number has always been a part of the indicators making up the Coincident Index.
I've put in about 300 job applications over the last six months. I've gotten three interviews, and been turned down for all of them, because I'm overqualified. The number of posted openings doesn't matter to me. Actually being able to get a job matters. As far as I can tell, the job market is pathetic right now.
Rob Dawg said: "You not only commented on the non-magical nature of 350k as well but completely reversed the meaning of CR's codicil just to score a worthless debating point."
Why is it a worthless debating point to say that what CR says and what he really thinks are inconsistent? He clearly thinks that all the other information included in his chart is important, so why add-in something meaningless, unless he doesn't think it's meaningless?
And again, your argument is with CR. If in your opinion he's using inaccurate data or incorrectly-adjusted data, your fight is with him, not me.
I'm simply trying to use the data that CR himself uses to demonstrate that his conclusions are not the only ones to be drawn, that the same data can be interpreted different ways.
As to your alternate calculations of what how you think the data "ought" to be calculated, why wouldn't any alternate calculations that I come up with proving my point of view be just as valid?
I think the rule "you can make up your own mind, but you can't make up your own numbers" applies here.
I remember hearing this during the early nineties. The sad part is my company generally doesn't like to hire colledge grads because after spending 20-30k to get em up to speed if something a little better comes along they bail.
The last batch of apps processed were frightening...I will leave it at that.
Chris
P.S.- One dude had 51 jobs listed since high school and he was only 28 !!!
OT, but relevant...Its nice to have Soros joining my team on this...where the "Wild things Are".
From the FT regarding CDSs
"....The market is totally unregulated and those who hold the contracts do not know whether their counterparties have adequately protected themselves. If and when defaults occur, some of the counterparties are likely to prove unable to fulfil their obligations. This prospect hangs over the financial markets like a sword of Damocles that is bound to fall, but only after some defaults have occurred. That must have played a role in the Feds decision not to allow Bear Stearns to fail. One possible solution is to establish a clearing house or exchange with a sound capital structure and strict margin requirements to which all existing and future contracts would have to be submitted. That would do more good in clearing the air than a grand regulatory reorganisation."
About.com has an article up right now that tells readers some very amusing advice along the lines of, "Oh no, a recession! Spend less money and you'll be safe!"
Rob Dawg said: "Third request, do we have a deal? Can we go back to 1990 baselines for both population AND methodolgy? If not why not?"
No, because that is an arbitrary date, for starters. Why 1990? Why not 2000? Why not 1980? What makes one "better" or "more accurate" than another? Says who?
I've got employment data going back to the 1960's. If we're going to re-do the baselines, why not start at 1960, on the argument that the 1990 vintage data was also manipulated by the government for political reasons at that time?
And if you're going to adjust the employment data, how can you draw any reasonable comparisons with any other economic data (like GDP) without backward-adjusting them according to the way they did it back then, too?
Finally, who says that the way economic data was calculated in 1990 is even appropriate to the economy of 2008? Different, yes, but does it more-accurately reflect what's going on? Maybe, maybe not.
You're trying to adjust the data to fit your point of view, when a simpler interpretation also explains the situation: Employment conditions aren't as bad.
There will be no recession at all, at least none officially.
They will keep spinning the numbers, and this works well when intending to hyperinflate and destroy the currency and the middle class. Inflation can easily be moved directly over to GDP, so as prices increase, it gives the illusion of higher GDP even though it is all just inflation. Unrealistically low inflation-deflators will also be used in the GDP calculations, of course. This recession/depression/unwind will NOT be televised or otherwise acknowledged, at least not until the next group of crooks are in office. They'll try to blame it on Bush, while Bush will blame on it them. Then, they'll all agree to more bailouts and higher taxes to "fix" the problem. Meanwhile, the Dow - now backed by the Fed to insure that no company can fail - will be at 20,000. We'll all be in soup lines, but "the markets only go up!" so all is well.
Sebastian writes:
...(at the outset of the 1990-91 recession).
And:
Sebastian writes:
Rob Dawg said: "Third request, do we have a deal? Can we go back to 1990 baselines for both population AND methodolgy? If not why not?"
No, because that is an arbitrary date, for starters. Why 1990?
Case closed. You are not even internally consistent. You are self contradictory. You won't even agree to terms you set yourself.
Would be great to adjust numbers for labor force sizes more than by population size.
Having more population 65 or older shouldn't matter when it comes to the relationship between unemployment and recessions.
===================================
Sebastian wrote:
CR said: "Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise."
They will never admit one started on Bush's watch......EVER...
Ciao
MS
second or third
too close
OT: A lot of times I'm skeptical of Mish because he always seems to know exactly what the future holds, but I think his post today on the Fed Uncertainty Principle
is well worth reading.
The idea that the Fed is basically creating destructive feedback loops within the economy that wouldn't exist naturally, despite presumably having good intentions, I think is no longer some crackpot theory in light of recent events.
3.5 Stars. Would read again.
ah yes, the mere threat of a Democratic President is enough to crash not only the entire US economy but also take out the Spanish housing market. It may also be behind the disappearance of bees, bats and frogs and the collapsing of Antarctic ice-shelves.
CR, To be fair to Sebastian, you should overlay the Wright Model B indicators. LOL!
This could be the most widely anticipated recession ever.
Nice job
todays hearings are important b/c they will reveal the bankers for who they are. greedy, reckless, self interested elitists who have bankrupted the system and brought us to where we are.
as average joe and i have pointed out, the bankers will try to have it both ways this morning. in order to justify their bailout of Bear they have to admit how dire the situation really is. BB yesterday said how "fragile" the financial system is today.
Paul's convoluted pt was that big business and gov't are joining hands to screw the masses. his last remark was a shot over the bow and i paraphrase: "maybe we should let the markets decide interest rates".
CR,
that uptick blip at the end of 2005, is that hurrican katrina?
recession here we come...
CR - noticed that your chart seems to indicate a fairly small recession ending by Q3 this year (2008). Am I interpreting this chart incorrectly?
The Bloomberg.com story characterizes the unemployment numbers as "unexpectedly higher".
Unexpectedly? Show of hands. Who would NOT have expected the unemployment numbers to be higher?
I thought so.
Just as i was about to make some snide comment that I was Jonesing for my Thurday morning unemployment chartporn, CR comes through again.
One reason for the coincident and/or lagging nature has to do with the casual economy sector and employment mobility. The jobs most likely to be overlooked in these surveys are the first to go thus it isn't until after significant job losses that the people being counted are affected by conditions. The second factor, a highly mobile workforce, will be interesting this time. Many people who would normally relocate for job opportunities find themselves under "house arrest." I predict they will show up as a spike in claims shortly.
Is unemployement the final lagging indicator in this new housing led re-depression?
What other lags should we lookout for?
The Bloomberg.com story characterizes the unemployment numbers as "unexpectedly higher".
They are "unexpected" (wink nudge) if you're a professional shill for the hedge fund industry who keeps calling for a rebound in the economy and stocks every day of every week.
AC,
Regarding feedback loop. That's the crux of our over-leveraged asset inflation economic model. In the end, short term stability results in systemic failure.
For the 4th time, as is very clear from the graph:
1995-1996 show that the level of claims to indicate probable ression is approximately:
370,000-380,000
But, as usual, first rate graphics. Nice job.
How wide is that last bar on the right?
At this point I am less concerned w/ indicators that interrelationships. I would be more sanquine about our economy if I were confident that one bad sector wouldn't bump another which would ...
at first I thought this video is funny , then I thought for a while. I am not so sure anymore.
YouTube - The Job
People out of work will be more likely to spend their entire stimulus check. So I think this is another reason for stocks to rally.
CR -- "There is nothing magical about the 350K level."
I think we all agree that 350,000 is not magical.
I bet all the chart readers out here (there are plenty of us) would agree that the "magical" level is about
400,000
..
CR said: "Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise."
Right, there's nothing magical about the 350k level...but you included it, anyway, implying that there was.
And there's nothing to be gained by adjusting this indicator for population growth, because jobless claims of 350,000 with a non-farm payroll number of 138 million (current) is the same as 350,000 when the non-farm payroll number was 5 million lower at 133 million in Feb. 2001, immediately prior to the last recession.
Or when non-farm payrolls were 12 million less at 126 million (at the outset of the 1990-91 recession).
Carefully-chosen data for a carefully-drawn chart using carefully-chosen assumptions doesn't make an argument true, however convincing it might seem, and I believe we're all going to see that as the year goes on and new data becomes available.
Sebastia
Sebastian, deal. While we are at it we'll use the unemployment calculation they used in 1990.
We all agree 350k is a dimensionless number useful only for trend and relative change. Let's move on without the unnecessary sophistry.
Rob Dawg said: "...Let's move on without the unnecessary sophistry."
What you refer to as "sophistry" is simply looking at the data presented from a neutral point of view. If you don't think unemployment is being measured properly, then you should be giving CR a hard time about not providing accurate data, instead of me for simply using the data he provides.
S.
Sebastian,
What is ur view on the data ?
a.Good ?
b.Not Good / Recessionary ?
c.No View ?
Lets keep it simple.
"Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise."
As others have said, I think we should adjust for total employment numbers.
Dr. Dan asked: "What is ur view on the data ?
a.Good ?
b.Not Good / Recessionary ?
c.No View ?..."
a. Good, within normal parameters for continued economic expansion.
Sebastia
"Good, within normal parameters for continued economic expansion"
So why is the majority worried about it ? Are they paranoid ?
Dr. Dan asked: "So why is the majority worried about it? Are they paranoid?"
My opinion? Too much Internet and TV, not enough Excel and historical data.
Sebastia
Please stop feeding that clown Sebastian. He's purely a troll. Get over the urge.
Seb,
This is your sophistry I was commenting on:
Right, there's nothing magical about the 350k level...but you included it, anyway, implying that there was.
You not only commented on the non-magical nature of 350k as well but completely reversed the meaning of CR's codicil just to score a worthless debating point.
Now you go after me for objecting to this behavior.
Instead, answer the question. do we have a deal? can we adjust the 350k for population AND return to the 1990 methodology for calculating the unemployment rate?
Roughly the pre-Clinton U-3 would be 7.5% and the reference 1990 350k population adjustment would be (234,243,963 x 74.5%) population in workforce divided by (234,243,963 x 69.2%) people employed = 1.077 multiplier or 377k low end and a pure raw population adjusted 418k high end.
Sebastian
Sebastian | 04.03.08 - 12:42 pm |
Seb,
I may not agree 100% with everthing you post but here is tidbit...I just counted all the current job openings nationwide at my trucking co.
A shade over 500.
Try finding a CDL with a hazmat endorsement that has no major moving violations and only 1 minor in the last three years...BTW this is for insurance,not gubmint regs.
When our volume drops 20% like during the dot com bust and we have all open positions filled I will start to panic then.
Chris
"Labor related gauges are at best coincident indicators, and this indicator suggests the economy is in recession."
The Conference Board and the people who put together the venerable and still useful LEI would not entirely agree with that. Claims are included as one of the components making up the Leading Index. Surprisingly (or maybe not), the much more widely watched and reported on non-farm payrolls number has always been a part of the indicators making up the Coincident Index.
Cobra,
I've put in about 300 job applications over the last six months. I've gotten three interviews, and been turned down for all of them, because I'm overqualified. The number of posted openings doesn't matter to me. Actually being able to get a job matters. As far as I can tell, the job market is pathetic right now.
Rob Dawg said: "You not only commented on the non-magical nature of 350k as well but completely reversed the meaning of CR's codicil just to score a worthless debating point."
Why is it a worthless debating point to say that what CR says and what he really thinks are inconsistent? He clearly thinks that all the other information included in his chart is important, so why add-in something meaningless, unless he doesn't think it's meaningless?
And again, your argument is with CR. If in your opinion he's using inaccurate data or incorrectly-adjusted data, your fight is with him, not me.
I'm simply trying to use the data that CR himself uses to demonstrate that his conclusions are not the only ones to be drawn, that the same data can be interpreted different ways.
As to your alternate calculations of what how you think the data "ought" to be calculated, why wouldn't any alternate calculations that I come up with proving my point of view be just as valid?
I think the rule "you can make up your own mind, but you can't make up your own numbers" applies here.
Sebastia
Sebastian with the last word again. What a surprise!
Sebastian, how's that New Century great stock tip working out for you?
Keep It Simple, I'm Stupid | Homepage | 04.03.08 - 1:14 pm |
I remember hearing this during the early nineties. The sad part is my company generally doesn't like to hire colledge grads because after spending 20-30k to get em up to speed if something a little better comes along they bail.
The last batch of apps processed were frightening...I will leave it at that.
Chris
P.S.- One dude had 51 jobs listed since high school and he was only 28 !!!
OT, but relevant...Its nice to have Soros joining my team on this...where the "Wild things Are".
From the FT regarding CDSs
"....The market is totally unregulated and those who hold the contracts do not know whether their counterparties have adequately protected themselves. If and when defaults occur, some of the counterparties are likely to prove unable to fulfil their obligations. This prospect hangs over the financial markets like a sword of Damocles that is bound to fall, but only after some defaults have occurred. That must have played a role in the Feds decision not to allow Bear Stearns to fail. One possible solution is to establish a clearing house or exchange with a sound capital structure and strict margin requirements to which all existing and future contracts would have to be submitted. That would do more good in clearing the air than a grand regulatory reorganisation."
Seb,
Third request, do we have a deal? Can we go back to 1990 baselines for both population AND methodolgy? If not why not?
" P.S.- One dude had 51 jobs listed since high school and he was only 28 !!! "
Now that is ... ummm, its just beyond ... hard to know what to write.
I suppose he knows what he doesn't want to do.
Somewhat Off-topic:
About.com has an article up right now that tells readers some very amusing advice along the lines of, "Oh no, a recession! Spend less money and you'll be safe!"
Recession-Proof Your Finances - How to Plan for and Survive a Recession
Rob Dawg said: "Third request, do we have a deal? Can we go back to 1990 baselines for both population AND methodolgy? If not why not?"
No, because that is an arbitrary date, for starters. Why 1990? Why not 2000? Why not 1980? What makes one "better" or "more accurate" than another? Says who?
I've got employment data going back to the 1960's. If we're going to re-do the baselines, why not start at 1960, on the argument that the 1990 vintage data was also manipulated by the government for political reasons at that time?
And if you're going to adjust the employment data, how can you draw any reasonable comparisons with any other economic data (like GDP) without backward-adjusting them according to the way they did it back then, too?
Finally, who says that the way economic data was calculated in 1990 is even appropriate to the economy of 2008? Different, yes, but does it more-accurately reflect what's going on? Maybe, maybe not.
You're trying to adjust the data to fit your point of view, when a simpler interpretation also explains the situation: Employment conditions aren't as bad.
Sebastia
There will be no recession at all, at least none officially.
They will keep spinning the numbers, and this works well when intending to hyperinflate and destroy the currency and the middle class. Inflation can easily be moved directly over to GDP, so as prices increase, it gives the illusion of higher GDP even though it is all just inflation. Unrealistically low inflation-deflators will also be used in the GDP calculations, of course. This recession/depression/unwind will NOT be televised or otherwise acknowledged, at least not until the next group of crooks are in office. They'll try to blame it on Bush, while Bush will blame on it them. Then, they'll all agree to more bailouts and higher taxes to "fix" the problem. Meanwhile, the Dow - now backed by the Fed to insure that no company can fail - will be at 20,000. We'll all be in soup lines, but "the markets only go up!" so all is well.
Sebastian writes:
...(at the outset of the 1990-91 recession).
And:
Sebastian writes:
Rob Dawg said: "Third request, do we have a deal? Can we go back to 1990 baselines for both population AND methodolgy? If not why not?"
No, because that is an arbitrary date, for starters. Why 1990?
Case closed. You are not even internally consistent. You are self contradictory. You won't even agree to terms you set yourself.
Would be great to adjust numbers for labor force sizes more than by population size.
Having more population 65 or older shouldn't matter when it comes to the relationship between unemployment and recessions.
===================================
Sebastian wrote:
CR said: "Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise."