From the graph, the rapid rise in the unemployment rate looks most like that from 1974. We'll have to see how high it rises. The employment/population ratio down all the way to 61.4%.
Can anyone answer a few questions, or at least point me in the right direction for a good resource? I am wondering the following: My understanding is that prior to Clinton, unemployment data was generated in a different manner. Is that what the u6 number represents? Is that the pre-Clinton calculation? Also, what is the difference in percentage looking at the entire workforce in eligibility for unemployment benefits? Are 1099 contract employees eligible for instance? Any help appreciated. Thanks!
Let me elaborate a little on 10-12% official numbers.
There job losses when an economy contracts, when companies consolidate, cut dead-wood, reduce redundancies and sluff off unprofitable business units and lines of business. This assumes a contraction but a nice background noise of demand, just reduced demand.
Then there's a deflationary event which happens much faster than policy can affect. That's when the first stage of consolidation happens along with the other modifications and right sizings--but it takes a few quarters to evaluate the effect and realize that insolvency is the next step, bk the next after that--but you have to get in line now with all the other bks--and still policy can't catch up (unless it prepackages whole economic sectors--auto, banks, financials, etc...)--that's something else. That's when the newly consolidated businesses still fail, and demand doesn't exist. That's velocity and acceleration--look at for falling coyote's being chased by anvils...unemployment will accelrate and hit 10-12% very very fast.
disregard previous months upward revisions.No two months are exactly the same.ymmv.consult your private econmist for a more accurate representation of theses statistics.
Looking at the prior recessions, the unemployment rate slope continued up at about the same rate until just after the recession ended. Assuming that Roubini is correct and that we have another 12 months of recession, then unemploymnet shoud peak at about 9.5%. Not bad if Roubini is correct.
From the BLS press release
"In December, the number of persons who worked part time for economic reasons (some-times referred to as involuntary part-time workers) continued to increase, reaching 8.0 million."
For comparison, in November 7.3 million persons were employed part time for economic reasons.
This is a huge jump
I posted this on the dead thread from the commissioner's report
The number of persons working part time who would have
preferred full-time employment also continued to increase in
December, rising to 8.0 million. Over the last 12 months, the
number of such workers has grown by 3.4 millio
Thanks for your take on the unemployment data, blackhat. It appears Wall Street, based on the jump in futures, still assumes this will be the garden variety recession. Has Steve Leisman on CNBC called a bottom yet?
Whew.....I never did like "Searched for work and available to work now". It is much less demeaning to be classified as "Marginally attached to labor force".
Also what does this gobbledygook really mean; "Monthly revisions result from additional sample reports and monthly recalculation of seasonal factors"? Because the revision downward of 103K for Oct 2008 was a HELL of a "recalc".
NEW YORK (CNNMoney.com) -- Wall Street futures pulled out of their slump Friday and rose in pre-market trading, following a report showing a huge decline in jobs.
Must be the whole "pricing in" thing, huh? Sounds more like insanity to me.
Blackhat, we simians are simple folk and generally just curve fit prior data. Of course, if the B/D model was properly correlated to reality, the numbers would be much higher.
At what point do job losses tip the board over so that job losses beget more losses in an accelerating spiral?
The whole debate over whether we see depression is getting silly IMO. The increase in deficit spending in 2009 will likely exceed the now "normal" deficit spending by something like 1-1.5 Trillion.
That is 10% of GDP being injected into the economy via additional borrowed funds and still the consensus (read optimistic) view is for a flat to slightly down GDP in 2009. Absent this massive increase in Gov't borrowing one would have to assume that we would be looking at a -10 to -15% contraction just in 2009.
This is a Depression with Gov't doing everything in it's power to extend it and make it ulitmately worse.
Of course, that being said, the markets will love this job report and send the markets higher today.
Darwindows(Unrated) writes: Can anyone answer a few questions, or at least point me in the right direction for a good resource? I am wondering the following: My understanding is that prior to Clinton, unemployment data was generated in a different manner.
Is that what the u6 number represents? Is that the pre-Clinton calculation?
IIRC, no. Go to the Bureau of Labor Statistics or wikipedia for the U-class breakdown. Clinton stopped couting discouraged workers.
Here's the free Shadow Stats. They purport to have U-6 + discouraged. It is a little over 16%.
Some people have beef with his methodologies for certain data sets. Maybe they can speak up.
Also, what is the difference in percentage looking at the entire workforce in eligibility for unemployment benefits?
I fail my Economics Arcana roll and am not motivated toward research. Another mandarin will have to help you with this data, or perhaps you can look it up.
The graph really shows the effect of the easy money policy for fighting recessions (specifically, extremely low interest rates). That started in 1991. Common sense suggests that subsidizing fundamentally unprofitable activity by holding credit prices artificially low will encourage short-term production and shorten the recession but in turn will weaken the recovery as that activity inevitably gets halted.
Sure enough, prior to 1991 unemployment peaks sharply right at the end of the recession, But in the 1991 and 2001 recession, unemployment continues to rise for over a year to a peak well above anything seen during the official recession.
Expect this cycle to be much worse in delayed unemployment than the last two, given the ZIRP policies. That would mean a peak at least 1.5% higher than the rate at the end of the current recession, not seen until 2 years afterwards.
The political consequences are significant, because we are already committed to having unemployment increase constantly all the way until the 2010 midterms.
And don't forget that illegal aliens are a much larger percentage of our workforce than they were in 1980-82. They may not be on official payrolls but they do consume (if they have jobs).
U3 numbers are not useful at predicting consumption drops ( and further waves of layoffs) in a credit dependent system.
Another formerly good, well off client called me. Has pretty much lost everything.
These lost everything people I know are small business types who normally are the job creation engines of South Florida. Some of them spent more than they should, many not so. Took risks and were rewarded, but now severely punished.
No more use of houses to fund businesses.
Which was very successful for a long while.
Job losses threaten to pull the economy into a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once its begun.
Fair Economist(Unrated) writes: The political consequences are significant, because we are already committed to having unemployment increase constantly all the way until the 2010 midterms.
--
"At what point do job losses tip the board over so that job losses beget more losses in an accelerating spiral?"
Are we there yet, dad?
Yes, Tommy, we are finally there.
An evil govt can only do one thing -- more evil. That is why only evildoers get the top jobs in manipulating the economy. And for whose benefit evildoers manipulate the economy?
Please don't count on the economists about whether we are in a depression or not. Their record speaks for itself.
The economy is cliff diving. Is the TARP helping us?
"Harvard Law professor Elizabeth Warren, said in its 56-page report that it(the Treasury Dept.) "still does not know what the banks are doing with taxpayer money."
By investing in banks that have refused "to provide any accounting of how they are using taxpayer money," the Treasury Department has "eroded" public confidence, the report stated."
According to a loan officer at my bank, some banks receiving TARP money are hoarding it in order to buy future failed banks, leveraging the TARP funds and the FDIC to do so. Isn't that beautiful? They sure as hell aren't loaning the money out.
More bad trade data from Asia
Posted on Friday, January 9th, 2009
By bsetser
Taiwans December exports are down over 40% y/y largely because of a huge fall in exports of electronic components to China. The fall topped expectations. It adds to the mounting evidence that the current global deceleration is quite sharp and quite deep.
Taiwans imports are also down by around 45%. Thank the big fall in commodity prices. Taiwan managed to post a trade surplus in December even with the enormous fall in its exports.
Koreas exports were also down in December though the 17.4% y/y fall in December wasnt quite as large at the 19% fall in November. Imports though fell by more over 21%. And Korea also posted a (small) trade surplus.
My guess based on the fall in Taiwans exports to China and the fall in commodity prices is that Chinas December trade data will show a quite significant fall in imports, keeping Chinas surplus large even as Chinas exports fall sharply.
The large fall in Germanys November exports highlights that the slump in trade is global. Japans exports fell by more (in percentage terms) than Germanys exports in November. US exports are almost certain to start shrinking too.
Expectations have been revised down dramatically, but most data points still seem to be worse than expected. That worries me.
By investing in banks that have refused "to provide any accounting of how they are using taxpayer money," the Treasury Department has "eroded" public confidence, . . . .
No kidding. I've even heard a couple of diehards say recently that they can't believe they voted for that guy.
We may or may not see a depression in an economic sense, but there's a lot of depression out there in the old fashioned psychological sense.
By investing in banks that have refused "to provide any accounting of how they are using taxpayer money," the Treasury Department has "eroded" public confidence, the report stated."
trader walt
It could be worse. Given their secrecy we can only suspect that they are using the money to buy yachts and beach houses for their senior executives. If we actually knew that, public confidence would be even lower.
lawyerliz(Excellent) writes: They were insolvent folks, insolvent. Hoarding money is not a surprise. They are prolly still insolvent, even with TARP money.
It comes and goes. They did a lot of parking deals with PE. They of course don't have to have an accurate set of books since all the marking rules are suspended for their benefit.
I think few would fly any distance on their own, but they are all on life support so it hardly matters. They live and die by the Treasuries bubble now.
We never had a recovery from the 2001 recession. The so called recovery was was a debt binge that further impoverished the majority for the benefit of a tiny minority.
The current household debt levels portend a bleak economic future for a generation.
The actions of the Fed, Congress and the financial community to burden households with so much debt are unconscionable.
We loaded households up with debt and suppressed wage growth via globalization. No way that could ever lead to long term prosperity.
Although the NFP body count (sounds creepy) fell below what I and some others expected, that 7.2 UER looks more ominous than I'd care for, even being a bear (what's U6 up to now, I just woke up?)
Regarding the equity markets, there's a strong cycle turn date today or Monday. I personally want to see the market go up (even above Tuesday's high) and make a top. Just have to wait and see.
Until the deleveraging process had fully run its course, and a REleveraging occurs, with most likely a significant lag between the "DE" and "RE" cycles, there isn't demand for credit. Therefore, blaming the banks (for not lending/using TARP funds)is nonsense, there simply isn't demand.
"My guess based on the fall in Taiwans exports to China and the fall in commodity prices is that Chinas December trade data will show a quite significant fall in imports, keeping Chinas surplus large even as Chinas exports fall sharply."
All well and good for China, but they still face big social problems if they don't keep people employed -- much bigger than over here. Time to invest at home -- and sell some of those T-bonds.
"Angry Saver writes:
We never had a recovery from the 2001 recession. The so called recovery was was a debt binge that further impoverished the majority for the benefit of a tiny minority."
I equate the way we "recovered" from the 2001 recession to burning money in the fireplace to heat your house.
Harmoniker writes:
According to a loan officer at my bank, some banks receiving TARP money are hoarding it in order to buy future failed banks, leveraging the TARP funds and the FDIC to do so.
TARP hoarders are drooling for the other shoe to drop in CRE.
In some ways you were always my favortite character on the A-Team--so succinct and such a snappy dresser.
Yes, one way I would interpret the government actions is that they are trying to survive. Literally. They are in a fight and they can imagine sticks and heads. Really. They will pull out all the stops. Quantitative easing is much the equivalent as 'rolling up into a ball and beggin for your life' at this point.
Simian,
not jumping on you. Far from it. Welcome comments.
Not to be dis respectable, but comments with regard to solutions to our economic situation/possible solutions was designed for those individuals that do not regularly comment and not to those who have locked in opinions which are continually repeated...
No more use of houses to fund businesses. Which was very successful for a long while. \t lawyerliz | \t \t \t \t01.09.09 - 9:15 am | # lawyerliz | 01.09.09 - 9:15 am | #
HELOC should remain an option, but folks should be careful. Otherwise, it shuts off a lot of opportunity. One of my previous employers was founded by folks who took out HELOCs, and they've been reasonably successful over the last 20 or so years.
--
As per Radar Logic data, YoY decline in home prices hit a new record low for the US as a whole (25 metros) and in several metros.
THIS ECONOMY WILL NOT BOTTOM UNTIL AFTER THE HOME PRICES STOP FALLING ABOVE 5% ANNUAL RATE, YoY. And we are far from that point with the current decline rate of 20.6%.
"All well and good for China, but they still face big social problems if they don't keep people employed -- much bigger than over here."
Well, most Chinese are still farmers or know somebody in their family who is a farmer. What about American nail salon consultants and golf course trimmers? 70 percent of American workers are in the "consumption" sectors...
I'd bet the social unrest is much much bigger worry in the USA than in China!
They were insolvent folks, insolvent. Hoarding money is not a surprise. They are prolly still insolvent, even with TARP money.
Worse than that - they don't really even know whether they are insolvent or not. The crux is all the Level 3 assets - and while everybody knows there are many losses hidden in the Level 3 assets, they really are Level 3 and there's no way of knowing how much. Uncertainty about solvency is death in finance.
Would the decline in hours worked be affected by all the tech firms who took extended holiday breaks? (globally usually the week between xmas and New Years is when all the clean rooms are shut down and cleaned) this year, lots of places took 2-3 shutdowns, one Spansion is taking the whole month of January off. It is unpaid time unless you have vacation, these folks are employed but not working.
It affects probably 20-30,0000 people in North America, would that affect the stats or do these kind of work stopages without layoff even fit into the stats?
I think it's worse than that. More like eating our own fingers to prevent starvation.
Angry Saver
Reminds of a real story of a captain and crew of a whaler who ended up stranded at sea for months on end. When 'they' we're finally rescued, only the captain was left, sucking on the marrow of one of his mates finger bones. As he was approached, he made it clear to crew rescuing him that it was his finger bones, and they could just go get their own.
THIS ECONOMY WILL NOT BOTTOM UNTIL AFTER THE HOME PRICES STOP FALLING ABOVE 5% ANNUAL RATE, YoY
Ouch, no need to yell.
However, I wouldn't phrase it that way. That statement is being used as an excuse for propping up house prices, which will be very destructive long-term. The best way to put it is that the economy will not bottom until after home prices do not need to fall any further.
--
"I equate the way we "recovered" from the 2001 recession to burning money in the fireplace to heat your house."
Bob Dobbs,
I couldn't have said better myself.
The "recovery" was for holding on to and the future personal power of the three evildoers -- Greenspan, Bush and Bernanke. We would have had different leaders had the three evildoers not fanned the housing bubble. It is hard for born-and-bred American dopes to figure that part out. Blind faith in the system is a terrible affliction.
Looking at the graph, the current official unemployment rate is about the same as the average for the period from 1975-1993. Maybe what we see as really horrible is really the new normal. Of course, really horrible is still to come most likely. One thing that has changed in the last two recessions from earlier ones is that the unemployment rate has continued to rise for about 18 months even after the recession has ended though increasing at a somewhat more modest pace. If the current recession is similar, then the unemployment rate will likely continue to rise until 2011-2012 if the recession ends in 2009-2010.
The graph for period of 1990-2008 d strongly resembles the pattern from 1960-1974. What is concerning here is that the recovery from 1975-1980 resulted in a decrease of 3% in the unemployment rate followed by a 5% spike from 1980-1983. Since current monetary policy seems likely to recreate the inflation of that era at some point down the road and if the unemployment pattern holds,then we could well be looking at a peak of about 11% in the current cycle followed by a lackluster recovery with an even bigger spike in 5-6 years going up to 13-14%. With so many 1099-ers out there, this really could rival the Great Depression in terms of actual unemployment. I hadn't really thought quite that far out before. Is it possible to squeeze out of the current downturn without creating the inflationary backlash?
HELOC should remain an option, but folks should be careful. Otherwise, it shuts off a lot of opportunity. One of my previous employers was founded by folks who took out HELOCs, and they've been reasonably successful over the last 20 or so years.
xxxxx
OK, I can agree with this.. TO fund a business and accept the risk. But look how many funded SUVs etc without understanding the risk.
JAS, agree with you re falling home prices. Unfortunately the crooks are doing everything they can to prevent the necessary correction. Even the local crooks are getting involved in try to buy up foreclosures and fix and sell....all with taxpayers $$.
Not to be dis respectable, but comments with regard to solutions to our economic situation/possible solutions was designed for those individuals that do not regularly comment and not to those who have locked in opinions which are continually repeated...
Simian writes:
Looking at the prior recessions, the unemployment rate slope continued up at about the same rate until just after the recession ended. Assuming that Roubini is correct and that we have another 12 months of recession, then unemploymnet shoud peak at about 9.5%. Not bad if Roubini is correct.
Simian | 01.09.09 - 8:57 am | #
It is unclear to me whether that too is a function of the way it is calculated. As the economy improves "discouraged" workers re-enter the labor market which statistically boost unemployment.
I just don't see how these assumptions of a peak in real unemployment by 2010 make sense. My guess is that peak unemployment will happen real soon. Except for those employers working on contracts why would they wait to lay people off. Earlier there was the concern that where would you get the workers when the economy picks up- but that is pretty much taken care of.
Nobody is propping up house prices. Some sellers are refusing to sell, but that doesn't prop us house prices. The Fed gubmit is not buying houses with the tarp yet is it?
By the way, some clients that I would be willing to work with, were I a bank, are finally getting some decent modification offers.
In one case, Countrywide sold the loan to someone else, who immedicately called the client. So we think that the new owner of the loan bought it at a discount and so now has the flexibility to deal.
My client put 30% down. . .at peak. . and is underwater, but not hopelessly so.
Job losses threaten to pull the economy into a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once its begun.
Not to quibble, but I think you're referring to a positive feedback loop:
Blackhat, change of coffee... what about bombs bursting in mid-air? For the last few hours they been blasting fireworks here in Sihanoukville (think Goa and hash) to celebrate their liberation from the Khmer Rouge 30 years ago by those world class humanitarians the Vietnamese. Of course, they had to hang around another 10 years. Cautionary tale for USA - don't see too many Viet flags being waved or t-shirts emblazoned with the yellow star unless you have a hankering to be used for target practice. / end s
--
No country engaged in artificially boosting the economy like America did during 2002-06.
This under frikin 'free-market' Republican preachers -- Greenspan, Bush and Bernanke. Evil is what evil does.
The real serious ongoing problem in America is the impotence of the American People to be able to do anything about the govt. There is absolutely no reason for hope for a better future.
LLiz,
Here in the OC locals .gov is wanting to buy up foreclosures. They are saying to prevent neighborhood blight etc. Looks more like grandstanding to me.....using 'free' money, of course.
Under President Lyndon Johnson, the government decided individuals who had stopped looking for work for more than a year were no longer part of the labor force. This dramatically decreased the jobless rate reported by the government.
Appears someone has gone back and applied new counting methods to old data. Any comparisons across this event point are then false.
--
"It's beyond mind boggling that Bernanke and the majority of eCONomists couldn't see this coming."
Angry Saver,
No need to tax your mind on simple fact like the requirement for an American economist is to wear blinders. Some of them even sport a last name like Blinder. Economists have been, and would continue to be, part of the problem in America.
Two friends, let go from $150k exec food service jobs, underwater with helocs on top plus overcapped car leases, will try short sales else go bk.
Sad to see personal financial implosions such as these at the same time perceptions of lower corporate wage, material and borrowing costs, along with a stimulus, are building a case for higher equity prices, but then congress serving their corporate clients at the expense of the taxpayer is old news.
lawyerliz, propping up house prices is the stated goal of many in government including Paulson and Frank. It's the reason mortgage rates are being driven to such ridiculously low levels.
Prices are dropping in spite of the propping (which needs to be stopping), but they are still slopping.
sportsfan writes:
...and that's why Paulson was such a great success...at least within his peer group....
Sure, sure, but what does it say about the american nation ?
Paulson et al is not the whole nation. Wouldn't you expect to see that after a year the american nation (with all it's institutions) would get a grip on the problem ? After the lapse of a year, the absence of anything but the transfer of bad debt into public hands is really frightening.
Two friends, let go from $150k exec food service jobs, underwater with helocs on top plus overcapped car leases, will try short sales else go bk.
Sad to see personal financial implosions such as these at the same time perceptions of lower corporate wage, material and borrowing costs, along with a stimulus, are building a case for higher equity prices, but then congress serving their corporate clients at the expense of the taxpayer is old news.
peAkcredit | 01.09.09 - 9:53 am | #
A case for higher equity prices? Like with an insolvent banking and potential US government debt default. OK....come on....
If GWBush is responsible for this mess, who will be named responsible for the economy four years from now?
Even if public educators teach people to attribute to a Republican President everything bad that happens in the U.S. economy, and to a Democratic President everything good that happens, that doesn't mean adults have to avoid thinking for themselves once they move out into the real world, does it?. Or does it?
"Our 70% consumption based economy has passed away. It was like a father to me; well, to just about everyone. I will miss it for the wealth and good times it ushered in."
Add in that there is no driver for employment to increase, and no prospect of corporate profits, and you have a sea-change in the nation's economic posture. Regional, smaller, and not better.
JohnR(VA) writes:
...Even if public educators teach people to attribute to a Republican President everything bad...
Well, you would probably have to acknowledge that at least the years of the most irresponsible lending, the not seeing what's comming (we still don't see the 40+trillion CDSes) and the impotence to deal with the mess falls under his watch. And that tarnishes his legacy.
I am not a Bush hater, but I feel very dissapointed about his leadership there. Can you attribute it to him being averted by this damn war in Iraq. Possibly, to a degree. But the above mentionet failures do tarnish his legacy even for non-Bush-haters.
He simply failed misserably there.
You and I agree. The outgoing President at best was asleep at the switch. At worst, . . .
I can remember a phone call between President George H.W. Bush and my boss during 1990 in which my boss was urging the then- President not to appoint an inexperienced bureaucrat to head up the FDIC at a time when there was a crisis of confidence in the banking system. The President (on his plane to somewhere) handed the phone to Nick Brady, who was then Sec. of Treasury and who was responsible for the bureaucrat's nomination. I knew then the jig was up because it was clear Bush 39 (?) had no clue as to what was going on in the banking sector. Neither did Brady, as it turned out.
All signs are that the President-elect is clueless as well.
Wall Street futures pulled out of their slump Friday and rose in pre-market trading, following a report showing a huge decline in jobs.
Jobs are simply a business expense to these people. These morons don't get that each jobholder is supposed to produce something, generate a profit, and also have a private life as a consumer, saver, and investor.
These numbers are only part of the story. What is the total salary paid to these workers? How many highly paid workers have taken lower paying jobs and don't show up in these statistics?
Third world finance begats third world poverty, wherever it is tried.
Harmoniker writes: According to a loan officer at my bank, some banks receiving TARP money are hoarding it in order to buy future failed banks, leveraging the TARP funds and the FDIC to do so. Isn't that beautiful? They sure as hell aren't loaning the money out.
According to a friend, whose wife is at FDIC, this was Hank and Sheila's plan once they realized the magnitude of the problem was beyond FDIC's ability to cope.
Many have seen what was coming, but pretty much no one saw how we'd get here.
Pretty much anybody should have been able to look at conditions a few years ago and say that the rest of the economy would follow housing down taking the stock market with it resulting in strained financial markets, rising unemployment and reduced consumer demand. And many did.
What is surprising is the disorderly way in which this has happened which can be ascribed to different feedback loops where market behaviors (be they for houses, stocks, or oil futures) fly in the face of common sense at an ever-increasing rate until there is a sudden mass-capitulation to reality.
It is evident in every case that government should have seen
it coming (and probably did) but did nothing. But the solutions were politically unpalatable. Government is a popularity contest funded by the parties it regulates.
But despite the lack of short term predictability, the end result is what just about everybody who didn't have their head stuck in the sand honestly thought it would be.
Negative feedback loops head toward equilibrium.
Assume Crash Positions! | Homepage | 01.09.09 - 9:40 am | #
negative feedback loops are exactly what's missing in an "open economy", and they aren't necessarily self-steering toward equilibrium, but towards an external pattern or numeric value. it is the same principle by which your thermostat works actually. you set the desired temperature (the "external pattern"), and it throws the switch (applies the "stimulus") activating the heating unit until the difference between actual and desired falls under a certain threshold value of tolerance, then shuts it off (removes the "stimulus"). this has little to nothing to do with a natural equilibrium unless the equilibrium condition can be known in advance, but much to do with control systems. that "external factor" supplies the delta to the system in attempt to force the convergence. they do "equilibriate" but only in that sense.
Not to brag, but I will anyway , all anyone had to do was look at the exponential growth of total debt (governmental, personal and corporate) as a percent of GDP to realize something was rotten. In Greenspan's book (Age of Turbulence) he defends the huge debt pile in this country. He says all developed countries have huge piles of debt, not to worry.
We have passed the 350% level (total debt vs gdp) this past year, the previous high was in (drum role please)..... 1930 at the now seemingly low level of 190%.
We are in for some tough times my friends. Sad to say, for our kids sake but it is true.
Angry Saver, Bob Dobbs, Jas re: post-2001 recovery
"Doing Something" is always the better political choice than doing nothing.
Bush "did something" in 2001; and Bush now Obama both are "doing something" here in 08-09. The problem is both are reading from the same Keynes-Friedman status quo playbook. I won't underestimate their ability to pull-off another illusion of recovery, even though it intuitively feels unlikely.
BTW, if you never read it, pick-up a copy of Michael Mandel's "The Coming Internet Depression" published in October 2000. Mandel you may recall coined/promoted the term "New Economy" during the tech bubble. An interesting perspective from someone who was a big believer, who then had a certain change of heart, and foresaw parallels between the 1930's and the 2000's.
We never had a recovery from the 2001 recession. The so called recovery was was a debt binge that further impoverished the majority for the benefit of a tiny minority. Angry Saver
That's it. In a nutshell. Theres is no need to look for more complex explanations.
Nemo
peak OIL=Peak Employment
Wait until next months report to see the bottom really fall out.
Wait until next months report
Neal | 01.09.09 - 8:47 am | #
Wow..... are you a Cubs fan?
Today 7.2%. Next year 10-12%.
This will accelerate in an unprecedented fashion.
Big drop in weekly hours worked -- about a 1% decline in the work week -- ouch
Tihis despite all the fakery.
Net Birth/Death model created 72,000 fake jobs to temper the report to only -524,00.
Prior months revised downward, like this one will be too.
And the mkt will skyrocket, 'cause the bulls will say that they thought it was gonna be 7.3% and therefore this is really good news.
Neal writes:
Wait until next months report to see the bottom really fall out.
next month is a "correction month" for the B/D model. For the last 2 years, those corrections add -3-400K jobs to the monthly report.
I think Jan will be -800k+
I'll make my usual monthly contribution. The 7.2% unemployment figure is U3. A better measure, IMO, is U6 and this rate is now at 13.5%
Table A-12. Alternative measures of labor underutilization
-K
Downward revisions for Oct and Nov as well.
From the graph, the rapid rise in the unemployment rate looks most like that from 1974. We'll have to see how high it rises. The employment/population ratio down all the way to 61.4%.
Every 6 months (Jan and July) they correct for Birth/Death model fiction. The corrections are always in the negative direction...
What's the double inverse ETF for employment?
Can anyone answer a few questions, or at least point me in the right direction for a good resource? I am wondering the following: My understanding is that prior to Clinton, unemployment data was generated in a different manner. Is that what the u6 number represents? Is that the pre-Clinton calculation? Also, what is the difference in percentage looking at the entire workforce in eligibility for unemployment benefits? Are 1099 contract employees eligible for instance? Any help appreciated. Thanks!
What's the double inverse ETF for employment?
giacutter | 01.09.09 - 8:51 am | #
Guns and ammo
Let me elaborate a little on 10-12% official numbers.
There job losses when an economy contracts, when companies consolidate, cut dead-wood, reduce redundancies and sluff off unprofitable business units and lines of business. This assumes a contraction but a nice background noise of demand, just reduced demand.
Then there's a deflationary event which happens much faster than policy can affect. That's when the first stage of consolidation happens along with the other modifications and right sizings--but it takes a few quarters to evaluate the effect and realize that insolvency is the next step, bk the next after that--but you have to get in line now with all the other bks--and still policy can't catch up (unless it prepackages whole economic sectors--auto, banks, financials, etc...)--that's something else. That's when the newly consolidated businesses still fail, and demand doesn't exist. That's velocity and acceleration--look at for falling coyote's being chased by anvils...unemployment will accelrate and hit 10-12% very very fast.
--bh
LESS Than Predicted.
disregard previous months upward revisions.No two months are exactly the same.ymmv.consult your private econmist for a more accurate representation of theses statistics.
u6 13.5%...ugly
What's the double inverse ETF for employment?
giacutter
China
The employment/population ratio down all the way to 61.4%.
That's just the adult population. Gross E2P is below 50 - and always has been. ( (154-10)/305 = 47.2% )
prior months revisions down big also...B/D is a joke..
u6 13.5%...ugly
crispy&cole | Homepage | 01.09.09 - 8:55 am | #
TAKE THE MARKET ON THAT!!!!!
Looking at the prior recessions, the unemployment rate slope continued up at about the same rate until just after the recession ended. Assuming that Roubini is correct and that we have another 12 months of recession, then unemploymnet shoud peak at about 9.5%. Not bad if Roubini is correct.
Off topic (as usual):
My opinion of Ken Lewis has gone up.
"He never liked Wall Street."
Brokers Disdain Toaster Salesmen in Bank America Deal (Update1) - Bloomberg.com
crispy&cole writes:
u6 13.5%...ugly
From the BLS press release
"In December, the number of persons who worked part time for economic reasons (some-times referred to as involuntary part-time workers) continued to increase, reaching 8.0 million."
For comparison, in November 7.3 million persons were employed part time for economic reasons.
This is a huge jump
A friend wants me to bet that January will bring one million new unemployed. Should I take the bet?
--
'This is another extremely weak employment report ..."
And no severe recession in sight, CR?
Jas
I posted this on the dead thread from the commissioner's report
The number of persons working part time who would have
preferred full-time employment also continued to increase in
December, rising to 8.0 million. Over the last 12 months, the
number of such workers has grown by 3.4 millio
sorry this morning--changed coffee--a little jittery...
my beach bungalow doesn't have cable... just 4 stations starring Hun Sen (hmm, although he beats Liesman on CNBC)... so how are they playing it?
Futures have turned up as a result of the jobs report. Yea!!!
And so begins the Obama rally.
simian,
Assuming Roubini is correct we don't hit 9% next year, we hit that in like end of Q1 09.
These type of "recessions" don't follow nice charts where you can predict the 'bottoms' with a ruler to extend projection lines.
I think the term geometric implossion comes to mind...
Thanks for your take on the unemployment data, blackhat. It appears Wall Street, based on the jump in futures, still assumes this will be the garden variety recession. Has Steve Leisman on CNBC called a bottom yet?
A friend wants me to bet that January will bring one million new unemployed. Should I take the bet?
ChipSeal | 01.09.09 - 8:58 am | #
Just on the NFP number? I'd definitely take the under on that.
Whew.....I never did like "Searched for work and available to work now". It is much less demeaning to be classified as "Marginally attached to labor force".
Also what does this gobbledygook really mean; "Monthly revisions result from additional sample reports and monthly recalculation of seasonal factors"? Because the revision downward of 103K for Oct 2008 was a HELL of a "recalc".
This chart doesn't go back far enough historically, if anyone catches my meaning.
As long as the credit crises indicators show progress, we should be OK.
I think those are just manipulated numbers. At some point they will stop manipulating those and all hell will break loose.
CNNMoney.com Pre-Market Report - Jan. 9, 2009
NEW YORK (CNNMoney.com) -- Wall Street futures pulled out of their slump Friday and rose in pre-market trading, following a report showing a huge decline in jobs.
Must be the whole "pricing in" thing, huh? Sounds more like insanity to me.
--
Most likely, we will have NET NEGATIVE JOBS DURING 2001-2010. This hasn't happened since the 1930.
And our resident economist doesn't even expect a severe recession, is that right?
Amazing.
Jas
I wonder if CR is still holding onto that prediction of unemployment staying below 8%?
And, I strongly suspect the UE figure for December, as bad as it is, is wishful thinking on the part of the administration.
Correct that: it's another lie put forward to partially salvage GWB's reputation in the history of the republic.
Buy seed stocks. Great time for a community garden or simple container gardening to cut food cost and share.
Blackhat, we simians are simple folk and generally just curve fit prior data. Of course, if the B/D model was properly correlated to reality, the numbers would be much higher.
At what point do job losses tip the board over so that job losses beget more losses in an accelerating spiral?
The whole debate over whether we see depression is getting silly IMO. The increase in deficit spending in 2009 will likely exceed the now "normal" deficit spending by something like 1-1.5 Trillion.
That is 10% of GDP being injected into the economy via additional borrowed funds and still the consensus (read optimistic) view is for a flat to slightly down GDP in 2009. Absent this massive increase in Gov't borrowing one would have to assume that we would be looking at a -10 to -15% contraction just in 2009.
This is a Depression with Gov't doing everything in it's power to extend it and make it ulitmately worse.
Of course, that being said, the markets will love this job report and send the markets higher today.
U3 numbers are not useful at predicting consumption drops ( and further waves of layoffs) in a credit dependent system.
U6 is closer to reality.
Darwindows(Unrated) writes:
Can anyone answer a few questions, or at least point me in the right direction for a good resource? I am wondering the following: My understanding is that prior to Clinton, unemployment data was generated in a different manner.
Is that what the u6 number represents? Is that the pre-Clinton calculation?
IIRC, no. Go to the Bureau of Labor Statistics or wikipedia for the U-class breakdown. Clinton stopped couting discouraged workers.
Inflation, Money Supply, GDP, Unemployment and the Dollar - Alternate Data Series
Here's the free Shadow Stats. They purport to have U-6 + discouraged. It is a little over 16%.
Some people have beef with his methodologies for certain data sets. Maybe they can speak up.
Also, what is the difference in percentage looking at the entire workforce in eligibility for unemployment benefits?
I fail my Economics Arcana roll and am not motivated toward research. Another mandarin will have to help you with this data, or perhaps you can look it up.
Another bleak day for the George W. Bush Legacy Project.
Another bleak day for the George W. Bush Legacy Project.
Dr. Wu | 01.09.09 - 9:11 am | #
As if..... this is all Obama's fault.
1929: Unemployment about three percent. 1930: From 3.2 to 8.7 and GNP falls 9.4
1931: 15.9 and 8.5
1932: 23.6 and GNP falls record 13.4
1.9 million during last four months, annualized number is about 4-5 percent. This year surely looks like 1930/31.
Dr. Wu writes:
Another bleak day for the George W. Bush Legacy Project.
Dr. Wu | 01.09.09 - 9:11 am | #
snip
And SO WELL DESERVED!
The graph really shows the effect of the easy money policy for fighting recessions (specifically, extremely low interest rates). That started in 1991. Common sense suggests that subsidizing fundamentally unprofitable activity by holding credit prices artificially low will encourage short-term production and shorten the recession but in turn will weaken the recovery as that activity inevitably gets halted.
Sure enough, prior to 1991 unemployment peaks sharply right at the end of the recession, But in the 1991 and 2001 recession, unemployment continues to rise for over a year to a peak well above anything seen during the official recession.
Expect this cycle to be much worse in delayed unemployment than the last two, given the ZIRP policies. That would mean a peak at least 1.5% higher than the rate at the end of the current recession, not seen until 2 years afterwards.
The political consequences are significant, because we are already committed to having unemployment increase constantly all the way until the 2010 midterms.
And don't forget that illegal aliens are a much larger percentage of our workforce than they were in 1980-82. They may not be on official payrolls but they do consume (if they have jobs).
U3 numbers are not useful at predicting consumption drops ( and further waves of layoffs) in a credit dependent system.
U6 is closer to reality.
Another formerly good, well off client called me. Has pretty much lost everything.
These lost everything people I know are small business types who normally are the job creation engines of South Florida. Some of them spent more than they should, many not so. Took risks and were rewarded, but now severely punished.
No more use of houses to fund businesses.
Which was very successful for a long while.
Job losses threaten to pull the economy into a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once its begun.
Fair Economist(Unrated) writes:
The political consequences are significant, because we are already committed to having unemployment increase constantly all the way until the 2010 midterms.
Thank you for the cunning observation, FE.
--
"At what point do job losses tip the board over so that job losses beget more losses in an accelerating spiral?"
Are we there yet, dad?
Yes, Tommy, we are finally there.
An evil govt can only do one thing -- more evil. That is why only evildoers get the top jobs in manipulating the economy. And for whose benefit evildoers manipulate the economy?
Please don't count on the economists about whether we are in a depression or not. Their record speaks for itself.
Jas
Thanks for the info Comrade Byzantine_Ruins!!
OT- What is a "9 Handle"? Just curious-
The economy is cliff diving. Is the TARP helping us?
"Harvard Law professor Elizabeth Warren, said in its 56-page report that it(the Treasury Dept.) "still does not know what the banks are doing with taxpayer money."
By investing in banks that have refused "to provide any accounting of how they are using taxpayer money," the Treasury Department has "eroded" public confidence, the report stated."
Where Did Taxpayer Money Go? Panel Slams Treasury - ABC News
x^5,
"9-handle" refers to the DJIA @ 9XXX.XX
Fake Jobs
At the right hand bottom of the above web page, it says
"2008 Total nonfarm over-the-month change, not seasonally adjusted (in thousands) Dec = -954"
Is 520K, seasonally adjusted number?
Since the banks weren't compelled in the first place to say, this is not surprising.
They were insolvent folks, insolvent. Hoarding money is not a surprise. They are prolly still insolvent, even with TARP money.
What is a "9 Handle"?
An insider-y bit of jargon that means the most significant digit of the statistic at hand is a 9.
According to a loan officer at my bank, some banks receiving TARP money are hoarding it in order to buy future failed banks, leveraging the TARP funds and the FDIC to do so. Isn't that beautiful? They sure as hell aren't loaning the money out.
Meridith Whitney said as much the other day LL
More bad trade data from Asia
Posted on Friday, January 9th, 2009
By bsetser
Taiwans December exports are down over 40% y/y largely because of a huge fall in exports of electronic components to China. The fall topped expectations. It adds to the mounting evidence that the current global deceleration is quite sharp and quite deep.
Taiwans imports are also down by around 45%. Thank the big fall in commodity prices. Taiwan managed to post a trade surplus in December even with the enormous fall in its exports.
Koreas exports were also down in December though the 17.4% y/y fall in December wasnt quite as large at the 19% fall in November. Imports though fell by more over 21%. And Korea also posted a (small) trade surplus.
My guess based on the fall in Taiwans exports to China and the fall in commodity prices is that Chinas December trade data will show a quite significant fall in imports, keeping Chinas surplus large even as Chinas exports fall sharply.
The large fall in Germanys November exports highlights that the slump in trade is global. Japans exports fell by more (in percentage terms) than Germanys exports in November. US exports are almost certain to start shrinking too.
Expectations have been revised down dramatically, but most data points still seem to be worse than expected. That worries me.
Setser
I guess the stockmarket is up on this news in anticipation of a Fed rate cut.
)
By investing in banks that have refused "to provide any accounting of how they are using taxpayer money," the Treasury Department has "eroded" public confidence, . . . .
No kidding. I've even heard a couple of diehards say recently that they can't believe they voted for that guy.
We may or may not see a depression in an economic sense, but there's a lot of depression out there in the old fashioned psychological sense.
By investing in banks that have refused "to provide any accounting of how they are using taxpayer money," the Treasury Department has "eroded" public confidence, the report stated."
trader walt
It could be worse. Given their secrecy we can only suspect that they are using the money to buy yachts and beach houses for their senior executives. If we actually knew that, public confidence would be even lower.
I guess the stockmarket is up on this news in anticipation of a Fed rate cut.
)
Yancey Ward | 01.09.09 - 9:21 am | #
LMFAO.
lawyerliz(Excellent) writes:
They were insolvent folks, insolvent. Hoarding money is not a surprise. They are prolly still insolvent, even with TARP money.
It comes and goes. They did a lot of parking deals with PE. They of course don't have to have an accurate set of books since all the marking rules are suspended for their benefit.
I think few would fly any distance on their own, but they are all on life support so it hardly matters. They live and die by the Treasuries bubble now.
We never had a recovery from the 2001 recession. The so called recovery was was a debt binge that further impoverished the majority for the benefit of a tiny minority.
The current household debt levels portend a bleak economic future for a generation.
The actions of the Fed, Congress and the financial community to burden households with so much debt are unconscionable.
We loaded households up with debt and suppressed wage growth via globalization. No way that could ever lead to long term prosperity.
Although the NFP body count (sounds creepy) fell below what I and some others expected, that 7.2 UER looks more ominous than I'd care for, even being a bear (what's U6 up to now, I just woke up?)
Regarding the equity markets, there's a strong cycle turn date today or Monday. I personally want to see the market go up (even above Tuesday's high) and make a top. Just have to wait and see.
Until the deleveraging process had fully run its course, and a REleveraging occurs, with most likely a significant lag between the "DE" and "RE" cycles, there isn't demand for credit. Therefore, blaming the banks (for not lending/using TARP funds)is nonsense, there simply isn't demand.
"My guess based on the fall in Taiwans exports to China and the fall in commodity prices is that Chinas December trade data will show a quite significant fall in imports, keeping Chinas surplus large even as Chinas exports fall sharply."
All well and good for China, but they still face big social problems if they don't keep people employed -- much bigger than over here. Time to invest at home -- and sell some of those T-bonds.
REbear, I'm curious about that number as well.
"Angry Saver writes:
We never had a recovery from the 2001 recession. The so called recovery was was a debt binge that further impoverished the majority for the benefit of a tiny minority."
I equate the way we "recovered" from the 2001 recession to burning money in the fireplace to heat your house.
Harmoniker writes:
According to a loan officer at my bank, some banks receiving TARP money are hoarding it in order to buy future failed banks, leveraging the TARP funds and the FDIC to do so.
TARP hoarders are drooling for the other shoe to drop in CRE.
U6 is at 13.5% for whomever asked.
Mr. T,
In some ways you were always my favortite character on the A-Team--so succinct and such a snappy dresser.
Yes, one way I would interpret the government actions is that they are trying to survive. Literally. They are in a fight and they can imagine sticks and heads. Really. They will pull out all the stops. Quantitative easing is much the equivalent as 'rolling up into a ball and beggin for your life' at this point.
Simian,
not jumping on you. Far from it. Welcome comments.
--bh
Comrade Byzantine_Ruins,
Not to be dis respectable, but comments with regard to solutions to our economic situation/possible solutions was designed for those individuals that do not regularly comment and not to those who have locked in opinions which are continually repeated...
jmo
No more use of houses to fund businesses.
Which was very successful for a long while.
\t lawyerliz | \t \t \t \t01.09.09 - 9:15 am | #
lawyerliz | 01.09.09 - 9:15 am | #
HELOC should remain an option, but folks should be careful. Otherwise, it shuts off a lot of opportunity. One of my previous employers was founded by folks who took out HELOCs, and they've been reasonably successful over the last 20 or so years.
--
As per Radar Logic data, YoY decline in home prices hit a new record low for the US as a whole (25 metros) and in several metros.
THIS ECONOMY WILL NOT BOTTOM UNTIL AFTER THE HOME PRICES STOP FALLING ABOVE 5% ANNUAL RATE, YoY. And we are far from that point with the current decline rate of 20.6%.
Jas
Comrade Kristina,
Thanks. Do you happen to know what year U-6 was ever that high?
I equate the way we "recovered" from the 2001 recession to burning money in the fireplace to heat your house. - Bob Dobbs
I think it's worse than that. More like eating our own fingers to prevent starvation.
Here's the release. Percentage breakout of unemployment is at the bottom of page 21.
http://www.bls.gov/news.release/pdf/empsit.pdf
"All well and good for China, but they still face big social problems if they don't keep people employed -- much bigger than over here."
Well, most Chinese are still farmers or know somebody in their family who is a farmer. What about American nail salon consultants and golf course trimmers? 70 percent of American workers are in the "consumption" sectors...
I'd bet the social unrest is much much bigger worry in the USA than in China!
They were insolvent folks, insolvent. Hoarding money is not a surprise. They are prolly still insolvent, even with TARP money.
Worse than that - they don't really even know whether they are insolvent or not. The crux is all the Level 3 assets - and while everybody knows there are many losses hidden in the Level 3 assets, they really are Level 3 and there's no way of knowing how much. Uncertainty about solvency is death in finance.
Rich,
Would the decline in hours worked be affected by all the tech firms who took extended holiday breaks? (globally usually the week between xmas and New Years is when all the clean rooms are shut down and cleaned) this year, lots of places took 2-3 shutdowns, one Spansion is taking the whole month of January off. It is unpaid time unless you have vacation, these folks are employed but not working.
It affects probably 20-30,0000 people in North America, would that affect the stats or do these kind of work stopages without layoff even fit into the stats?
Persecuted Comrade Anonymouse(Very Good) writes:
\tx^5,
"9-handle" refers to the DJIA @ 9XXX.XX
| \t01.09.09 - 9:18 am | #
\t Persecuted Comrade Anonymouse | \t \t \tHomepage
Persecuted Comrade Anonymouse | Homepage | 01.09.09 - 9:18 am | #
Thanks- I'm now slightly less confused.
I think it's worse than that. More like eating our own fingers to prevent starvation.
Angry Saver
Reminds of a real story of a captain and crew of a whaler who ended up stranded at sea for months on end. When 'they' we're finally rescued, only the captain was left, sucking on the marrow of one of his mates finger bones. As he was approached, he made it clear to crew rescuing him that it was his finger bones, and they could just go get their own.
--bh
Yancey,
Good thing I had finished my cup of coffee!
Jas, it sounds like you're not buying into the "V" shaped recovery mantra
THIS ECONOMY WILL NOT BOTTOM UNTIL AFTER THE HOME PRICES STOP FALLING ABOVE 5% ANNUAL RATE, YoY
Ouch, no need to yell.
However, I wouldn't phrase it that way. That statement is being used as an excuse for propping up house prices, which will be very destructive long-term. The best way to put it is that the economy will not bottom until after home prices do not need to fall any further.
--
"I equate the way we "recovered" from the 2001 recession to burning money in the fireplace to heat your house."
Bob Dobbs,
I couldn't have said better myself.
The "recovery" was for holding on to and the future personal power of the three evildoers -- Greenspan, Bush and Bernanke. We would have had different leaders had the three evildoers not fanned the housing bubble. It is hard for born-and-bred American dopes to figure that part out. Blind faith in the system is a terrible affliction.
Jas
Thanks- I'm now slightly less confused.
xxxxx
first number ie job lossaes at 500,000 is 5 handle. DOW at 9,000 is a 9 handle
regarding the L shaped recovery...what if we just tilt the L on it's side _____|
slid,
I think most were forced vacation days where the employees got paid... I don't know know how vacation days are counted.
Uncertainty about solvency is death in finance.
I continue to have no doubt that they are indeed insolvent.
Eventually, the government will make them solvent but only at the expense of so much else. Sigh.
PCA, I can't find it, I'm guessing 1940 from the data I've been able to collect.
Looking at the graph, the current official unemployment rate is about the same as the average for the period from 1975-1993. Maybe what we see as really horrible is really the new normal. Of course, really horrible is still to come most likely. One thing that has changed in the last two recessions from earlier ones is that the unemployment rate has continued to rise for about 18 months even after the recession has ended though increasing at a somewhat more modest pace. If the current recession is similar, then the unemployment rate will likely continue to rise until 2011-2012 if the recession ends in 2009-2010.
The graph for period of 1990-2008 d strongly resembles the pattern from 1960-1974. What is concerning here is that the recovery from 1975-1980 resulted in a decrease of 3% in the unemployment rate followed by a 5% spike from 1980-1983. Since current monetary policy seems likely to recreate the inflation of that era at some point down the road and if the unemployment pattern holds,then we could well be looking at a peak of about 11% in the current cycle followed by a lackluster recovery with an even bigger spike in 5-6 years going up to 13-14%. With so many 1099-ers out there, this really could rival the Great Depression in terms of actual unemployment. I hadn't really thought quite that far out before. Is it possible to squeeze out of the current downturn without creating the inflationary backlash?
Jas Jain,
If we cross real-time U6 rates of 20%, we are in a world of hurt.
In typical CR-blogger terminology :
Yeeaahh, down goes the sucker!
HELOC should remain an option, but folks should be careful. Otherwise, it shuts off a lot of opportunity. One of my previous employers was founded by folks who took out HELOCs, and they've been reasonably successful over the last 20 or so years.
xxxxx
OK, I can agree with this.. TO fund a business and accept the risk. But look how many funded SUVs etc without understanding the risk.
JAS, agree with you re falling home prices. Unfortunately the crooks are doing everything they can to prevent the necessary correction. Even the local crooks are getting involved in try to buy up foreclosures and fix and sell....all with taxpayers $$.
Anonymous(Unrated) writes:
Comrade Byzantine_Ruins,
Not to be dis respectable, but comments with regard to solutions to our economic situation/possible solutions was designed for those individuals that do not regularly comment and not to those who have locked in opinions which are continually repeated...
You specifically requested an opinion:
link
Anonymous(Unrated) writes:
Comrade Byzantine_Ruins,
I do not mean to be disrespectable, however, you do not appear to offer a solution...
You got one. Ticket resolved. Thank you for shopping Value-Rep(sm).
Simian writes:
Looking at the prior recessions, the unemployment rate slope continued up at about the same rate until just after the recession ended. Assuming that Roubini is correct and that we have another 12 months of recession, then unemploymnet shoud peak at about 9.5%. Not bad if Roubini is correct.
Simian | 01.09.09 - 8:57 am | #
It is unclear to me whether that too is a function of the way it is calculated. As the economy improves "discouraged" workers re-enter the labor market which statistically boost unemployment.
I just don't see how these assumptions of a peak in real unemployment by 2010 make sense. My guess is that peak unemployment will happen real soon. Except for those employers working on contracts why would they wait to lay people off. Earlier there was the concern that where would you get the workers when the economy picks up- but that is pretty much taken care of.
Nobody is propping up house prices. Some sellers are refusing to sell, but that doesn't prop us house prices. The Fed gubmit is not buying houses with the tarp yet is it?
By the way, some clients that I would be willing to work with, were I a bank, are finally getting some decent modification offers.
In one case, Countrywide sold the loan to someone else, who immedicately called the client. So we think that the new owner of the loan bought it at a discount and so now has the flexibility to deal.
My client put 30% down. . .at peak. . and is underwater, but not hopelessly so.
Werner:
It's "this sucker's going down!" (Actual Bush quote)
Well, I'm off to work, enjoy the disaster porn and get your rally monkey towels out...
Just wow on U-6, the NSA Dec 2007 number was 8.7%, and NSA Nov 2008 was 12.2%, with NSA Dec 2008 at 13.5%...
Job losses threaten to pull the economy into a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once its begun.
Not to quibble, but I think you're referring to a positive feedback loop:
Positive feedback - Wikipedia, the free encyclopedia
Negative feedback loops head toward equilibrium.
Kristina,
Have a nice day
Comrade Byzantine_Ruins,
Sorry, not as cleaver as you...My thought was to offer some ideas short of the total collapse of our economy and society...
I do not want to the total collapse of the US. Not say you do...
Blackhat, change of coffee... what about bombs bursting in mid-air? For the last few hours they been blasting fireworks here in Sihanoukville (think Goa and hash) to celebrate their liberation from the Khmer Rouge 30 years ago by those world class humanitarians the Vietnamese. Of course, they had to hang around another 10 years. Cautionary tale for USA - don't see too many Viet flags being waved or t-shirts emblazoned with the yellow star unless you have a hankering to be used for target practice. / end s
Basel-
W wasn't that definite. The actual statement was "If money isnt loosened up, this sucker could go down."
Day of Chaos Grips Washington; Fate of Bailout Plan Unresolved - NY Times
--
No country engaged in artificially boosting the economy like America did during 2002-06.
This under frikin 'free-market' Republican preachers -- Greenspan, Bush and Bernanke. Evil is what evil does.
The real serious ongoing problem in America is the impotence of the American People to be able to do anything about the govt. There is absolutely no reason for hope for a better future.
Jas
The economy has lost over 1.5 million jobs over the last 3 months alone! - CR
That rate of change is astounding.
Absent all the extreme government support, this eCONomy would absolutely implode under its debt load.
It's beyond mind boggling that Bernanke and the majority of eCONomists couldn't see this coming.
"Just wow on U-6, the NSA Dec 2007 number was 8.7%, and NSA Nov 2008 was 12.2%, with NSA Dec 2008 at 13.5%...
1931: Unemployment rate from 8.7 to 15.9 ...
re : Basel Too
Thanks for the correction!
Sorry, I just couldn't resist using terminology not uncommon on this board. (and being a novice in this kind of language, got it wrong.)
LLiz,
Here in the OC locals .gov is wanting to buy up foreclosures. They are saying to prevent neighborhood blight etc. Looks more like grandstanding to me.....using 'free' money, of course.
Experts wary of city's plan to buy foreclosed homes | city, homes, housing - News - The Orange County Register
I envision a world where everyone has simply stopped looking for work--and therefore everyone is employed.
Turnips, what you wish were for dinner.
--bh
This chart and the part-time chart appear too smooth during 1963-1969 considing the data was adjusted reflect:
Great Depression jobs parallel may not be far flung
| Reuters
Under President Lyndon Johnson, the government decided individuals who had stopped looking for work for more than a year were no longer part of the labor force. This dramatically decreased the jobless rate reported by the government.
Appears someone has gone back and applied new counting methods to old data. Any comparisons across this event point are then false.
--
"It's beyond mind boggling that Bernanke and the majority of eCONomists couldn't see this coming."
Angry Saver,
No need to tax your mind on simple fact like the requirement for an American economist is to wear blinders. Some of them even sport a last name like Blinder. Economists have been, and would continue to be, part of the problem in America.
Jas
EUO ultra short Euro/ up 5% last 2 days/me likey
Two friends, let go from $150k exec food service jobs, underwater with helocs on top plus overcapped car leases, will try short sales else go bk.
Sad to see personal financial implosions such as these at the same time perceptions of lower corporate wage, material and borrowing costs, along with a stimulus, are building a case for higher equity prices, but then congress serving their corporate clients at the expense of the taxpayer is old news.
Come on, this is your chance to be part of The Next Greatest Generation! And see your children waste it all 20 years later...
lawyerliz, propping up house prices is the stated goal of many in government including Paulson and Frank. It's the reason mortgage rates are being driven to such ridiculously low levels.
Prices are dropping in spite of the propping (which needs to be stopping), but they are still slopping.
Jas Jain writes:
...There is absolutely no reason for hope for a better future...
What troubles me is that essentially all that happened all last year was only a gigantic transfer of bad private debt to the public sector.
No reform, no solution, nix. Just a transfer of bad debt. And that impotence does not augur well.
What troubles me is that essentially all that happened all last year was only a gigantic transfer of bad private debt to the public sector.
. . . and that's why Paulson was such a great success . . . at least within his peer group.
Prices are dropping in spite of the propping (which needs to be stopping), but they are still slopping.
I think you've inspired me to use Eminem as the basis for my next song parody.
I'm naming my stimulus pony Saladshooter
Someone took popeye's money
sportsfan writes:
...and that's why Paulson was such a great success...at least within his peer group....
Sure, sure, but what does it say about the american nation ?
Paulson et al is not the whole nation. Wouldn't you expect to see that after a year the american nation (with all it's institutions) would get a grip on the problem ? After the lapse of a year, the absence of anything but the transfer of bad debt into public hands is really frightening.
Two friends, let go from $150k exec food service jobs, underwater with helocs on top plus overcapped car leases, will try short sales else go bk.
Sad to see personal financial implosions such as these at the same time perceptions of lower corporate wage, material and borrowing costs, along with a stimulus, are building a case for higher equity prices, but then congress serving their corporate clients at the expense of the taxpayer is old news.
peAkcredit | 01.09.09 - 9:53 am | #
A case for higher equity prices? Like with an insolvent banking and potential US government debt default. OK....come on....
If GWBush is responsible for this mess, who will be named responsible for the economy four years from now?
Even if public educators teach people to attribute to a Republican President everything bad that happens in the U.S. economy, and to a Democratic President everything good that happens, that doesn't mean adults have to avoid thinking for themselves once they move out into the real world, does it?. Or does it?
A post (not mine) on another blog:
"Our 70% consumption based economy has passed away. It was like a father to me; well, to just about everyone. I will miss it for the wealth and good times it ushered in."
Add in that there is no driver for employment to increase, and no prospect of corporate profits, and you have a sea-change in the nation's economic posture. Regional, smaller, and not better.
JohnR(VA) writes:
...Even if public educators teach people to attribute to a Republican President everything bad...
Well, you would probably have to acknowledge that at least the years of the most irresponsible lending, the not seeing what's comming (we still don't see the 40+trillion CDSes) and the impotence to deal with the mess falls under his watch. And that tarnishes his legacy.
I am not a Bush hater, but I feel very dissapointed about his leadership there. Can you attribute it to him being averted by this damn war in Iraq. Possibly, to a degree. But the above mentionet failures do tarnish his legacy even for non-Bush-haters.
He simply failed misserably there.
Werener:
You and I agree. The outgoing President at best was asleep at the switch. At worst, . . .
I can remember a phone call between President George H.W. Bush and my boss during 1990 in which my boss was urging the then- President not to appoint an inexperienced bureaucrat to head up the FDIC at a time when there was a crisis of confidence in the banking system. The President (on his plane to somewhere) handed the phone to Nick Brady, who was then Sec. of Treasury and who was responsible for the bureaucrat's nomination. I knew then the jig was up because it was clear Bush 39 (?) had no clue as to what was going on in the banking sector. Neither did Brady, as it turned out.
All signs are that the President-elect is clueless as well.
Peak civilization?
Wall Street futures pulled out of their slump Friday and rose in pre-market trading, following a report showing a huge decline in jobs.
Jobs are simply a business expense to these people. These morons don't get that each jobholder is supposed to produce something, generate a profit, and also have a private life as a consumer, saver, and investor.
These numbers are only part of the story. What is the total salary paid to these workers? How many highly paid workers have taken lower paying jobs and don't show up in these statistics?
Third world finance begats third world poverty, wherever it is tried.
It can get worse and it can last forever.
As if..... this is all Obama's fault.
So, you are discounting to zero Obama's experience in the senate rubber stamping or hiding his head in the sand?
Peak civilization?
JohnR(VA) writes:
...All signs are that the President-elect is clueless as well...
That is my reading too (unforuanately).
Harmoniker writes:
According to a loan officer at my bank, some banks receiving TARP money are hoarding it in order to buy future failed banks, leveraging the TARP funds and the FDIC to do so. Isn't that beautiful? They sure as hell aren't loaning the money out.
According to a friend, whose wife is at FDIC, this was Hank and Sheila's plan once they realized the magnitude of the problem was beyond FDIC's ability to cope.
Peak civilization?
Should've seen this coming...
Many have seen what was coming, but pretty much no one saw how we'd get here.
Pretty much anybody should have been able to look at conditions a few years ago and say that the rest of the economy would follow housing down taking the stock market with it resulting in strained financial markets, rising unemployment and reduced consumer demand. And many did.
What is surprising is the disorderly way in which this has happened which can be ascribed to different feedback loops where market behaviors (be they for houses, stocks, or oil futures) fly in the face of common sense at an ever-increasing rate until there is a sudden mass-capitulation to reality.
It is evident in every case that government should have seen
it coming (and probably did) but did nothing. But the solutions were politically unpalatable. Government is a popularity contest funded by the parties it regulates.
But despite the lack of short term predictability, the end result is what just about everybody who didn't have their head stuck in the sand honestly thought it would be.
Not to quibble, but I think you're referring to a positive feedback loop:
Wikipedia, the free encyclopedia
Pos...sitive_feedback
Negative feedback loops head toward equilibrium.
Assume Crash Positions! | Homepage | 01.09.09 - 9:40 am | #
negative feedback loops are exactly what's missing in an "open economy", and they aren't necessarily self-steering toward equilibrium, but towards an external pattern or numeric value. it is the same principle by which your thermostat works actually. you set the desired temperature (the "external pattern"), and it throws the switch (applies the "stimulus") activating the heating unit until the difference between actual and desired falls under a certain threshold value of tolerance, then shuts it off (removes the "stimulus"). this has little to nothing to do with a natural equilibrium unless the equilibrium condition can be known in advance, but much to do with control systems. that "external factor" supplies the delta to the system in attempt to force the convergence. they do "equilibriate" but only in that sense.
just a comment, I guess that is what this and all threads are for:
IIRC, ever since the end of WWII, the Govt has assumed the debt of individuals(GI Bill)...
Over the last 50+ years, individuals have had their personal wealth increased at the expense of the govt.(US tax payers as a group)...
I may be wrong here, however, this wealth transferred created America's middle class...
Now that very same middle class has been in the process of being eliminated...
Is this good or bad...It depends on where you sit...
It more equally distributed wealth from the upper class to those below...
Now, and for the last generation, the process was reversed from the middle class to the upper class...which is the normal, with regard to history...
Personally, a strong middle class provided stability to our political system...
It has been so long since we have seen a norm, I do not think any exists anymore...
jmho
Anonymous | 01.09.09 - 1:07 pm | #
Not to brag, but I will anyway
, all anyone had to do was look at the exponential growth of total debt (governmental, personal and corporate) as a percent of GDP to realize something was rotten. In Greenspan's book (Age of Turbulence) he defends the huge debt pile in this country. He says all developed countries have huge piles of debt, not to worry.
We have passed the 350% level (total debt vs gdp) this past year, the previous high was in (drum role please)..... 1930 at the now seemingly low level of 190%.
We are in for some tough times my friends. Sad to say, for our kids sake but it is true.
You gotta love this...
ATLANTA JOURNAL; Hard Times Find Replica Of White House for Sale - NY Times
Angry Saver, Bob Dobbs, Jas re: post-2001 recovery
"Doing Something" is always the better political choice than doing nothing.
Bush "did something" in 2001; and Bush now Obama both are "doing something" here in 08-09. The problem is both are reading from the same Keynes-Friedman status quo playbook. I won't underestimate their ability to pull-off another illusion of recovery, even though it intuitively feels unlikely.
BTW, if you never read it, pick-up a copy of Michael Mandel's "The Coming Internet Depression" published in October 2000. Mandel you may recall coined/promoted the term "New Economy" during the tech bubble. An interesting perspective from someone who was a big believer, who then had a certain change of heart, and foresaw parallels between the 1930's and the 2000's.
Can anyone explain to me how last month 533,000 jobs were lost, yet the unemployment only increased 0.2%.
This month we have 524,000 jobs lost, and unemployment rises 0.5%.
Why such a big difference? That's over a 2x increase on almost identical job losses.
We never had a recovery from the 2001 recession. The so called recovery was was a debt binge that further impoverished the majority for the benefit of a tiny minority. Angry Saver
That's it. In a nutshell. Theres is no need to look for more complex explanations.