Why do you hate America ?

Apparently, reality is Super Duper Adverse.

Here in the Big-Leagues of hoi unempolloiment, you do a drive-by and everything with wheels is for sale on the curb...

RV's, trailered his-n-hers jetskis, trailer for sale or rent, boats, 5th wheels, cars, ATV's, tractors, etc.

Gas prices up, interest rates up, wages headed down. What's not to like?

CR,

Lovely graphs.

So the administration, assuming these numbers consistently trend higher (I would predict exceeding 10% at or by 09 Q4 is reasonable) must decide do we 1) stress test again to get banks to recapitalize given the new empirical data?, 2) or do we finally consider bank holidays and receivorships? or 3) ?

In any case, I also think we are going to see the feed-back loop portion of this accelerate so that the differential between assumed worse-case and reality contintues to grow.

--bh

Well there's really no surprise that most people are behind the curve here. That's quite common around any kind of unfolding disaster. People litteraly CAN"T IMAGINE how bad things are getting becuase for most of them have never seen it. Look at all the commenters who say "This isn't as bad as the 80s because the unemployment rate isn't as bad." They assume that this is as bas as it's going to get. Now I'm not in the TEOTWKI guns, gold, and canned food nutcase, but it WILL get worse and it will stay that way for years.

Kenc-
Great job with auto refresh on browser/comments!

Stick 9.4% UE and the 2nd derivative of the rate in your models and smoke THAT!

Graph is a 2-month average (it's quarterly)

Ken:

Thanks for the tweaks to the comments section.

Elmo?

WTF?

Poor Bulltards....is the Bond market killing your rally....poor bastards have not a clue.

two different surveys - payroll surveys employers and household surveys employees.

Over time they should tell the same story but on a month to month basis could be a lot of variance. I think the the hard number we have are initial claims which averaged around 630,000. Those are "real numbers" - they measure the loss but the new hires. In May we had a variance of 285,000 compared with 140,000 in April and essentially even in March. I don't know what the pattern has looked like in previous recessions- though it would be interesting.

KCoop.........NICE job........new comments just magically appear...........can you see if you can also magically make my comments appear witty, concise, and totally on-thread and on-target? Huh, Huh, Huh?

Ken the magic auto refresh is awesome. Even in todays tech world its cool to watch.

Bankers, Wall*Streeters and Politicians of the Allied Economic Farce!

You are about to embark upon the Great Crusade, toward which we have
striven these many months. The eyes of the world are upon you...

Agreed +100 on the refresh

subtitle to this thread should be: Reality Bites

LOVE the refresh btw

THe refresh is great, although I normally don't like change. Good job.

$TNX just hit 3.802

crazyv (profile) wrote on Fri, 6/5/2009 - 9:17 am

I now takes two incomes in many cases to support the household life style and mortgage payments. Therefore a household now has twice the probability (when compared with earlier periods when a single income sufficed) of having unemployment lead to insufficient income to make the mortgage payment. I believe Elizabeth Warren has written about this in the "two income trap". I think by extension 2/3 of people losing a job will result in a mortgage default. The option of having the wife go into the work force particularly in the context of "womens jobs" and "mens jobs" is no longer available.- firstly because 2/3 of familes are already 2 income and secondly we don't have distinct labor forces. Therefore I would argue that it requires a lower level of unemployment to create the same cascading effect as higher rate would have in the past.

Yes. It will be far more devastating this time with a lot more collateral damage. We are locked into a standard of living based on two-incomes and leverage as a way of life. It can't continue. A lot of the surplus post-WW2 was that the women who chose to remain in the work force augmented disposable income, and that continued for decades. Everyone wanted houses back then, too, of course, and to keep up with the jonesing, but most of the joneses didn't live based on leveraged dual income lifestyles.

Well "women's work" being what it was, it rarely constituted enough income to prevent default by itself if the husbund lost his job. But it might have enabled a family get by with an UNDERemployed husbund.

If a woman was to take a "man's job" (those jobs deemed out of bounds for women) it was common for her to be ostracized and taunted, the taunters claiming she was "taking the food from some man's family", in the 1930's.

There is no way you can factor in the vast changes that have occurred societally since then. Night & Day.

"Percent Job Losses in Post WWII Recessions"
http://2.bp.blogspot.com/_pMscxxELHEg/SikR-KLSmvI/AAAAAAAAFco/JmojYnTrezU/s1600-h/EMploymentPercentLosses.jpg

I'm looking at the shape of the curves in there and this recession is strikingly like the 1958 recession with respect to the unusual smoothness of the curves on the plot and their shapes (especially the early and middle parts - it starts getting zig-zag towards the end). I wonder if there are any common features of the 1958 recession with this one that might explain that...

I think there is a very simple explanation for the collective denial about the economy ("green shoots", and all that): the sheer speed at which the job losses are coming. We've gone from what was effectively full employment (around 5% UE) to the worst unemployment rate in nearly 30 years in just about a year.

With UE insurance paying for six months, and extended benefits for up to another six months, the vast majority of those who have been laid off haven't even had time yet to feel the pain. Not that being on unemployment is living large, but there is a world of difference between reduced income, and NO income. If, and very likely when, UE is double-digits at this time next year, I think there will be a very, very different attitude.

Recession of 1958 - Wikipedia, the free encyclopedia

"sharp, worldwide economic downturn..." I think I answered my own question... never mind..

Anyone else think gold is a buy here?

Still own GLD and GDX I bought in March. Not planning on selling here.

Recession of 1958 - Wikipedia, the free encyclopedia 

...consumer prices rose...
...Politically in the U.S. the Democratic party made major gains...

Now I wonder how that one ended.

From accrossthecurve.com / Deutsche Bank

The -345k decline in May nonfarm payrolls was significantly better than expected, and the prior two months were revised higher by 82k. However, the details of the report were not anywhere near as upbeat as the headline suggests. In particular, the weakness in hours and earnings are reason for concern. The length of the workweek declined by 0.1 hour to 33.1 hours, which is the aggregate hour equivalent of an additional loss of about 350k jobs. More importantly, the manufacturing workweek also declined (39.3 hrs vs. 39.5 previously) this is a negative sign for inventory restocking in the current quarter, because inventory rebuilds have historically been accompanied by a rise in manufacturing hours worked. Average hourly earnings rose 0.1% in the month, lowering the 3- and 6-month rates of change to 1.7% and 2.2%, respectively. In short, wages are rolling over and this is likely to continue in light of another large jump in the unemployment rate to 9.4% from 8.9% previously. The unemployment rate is now at a 25-year high.

Anon2 (profile) wrote on Fri, 6/5/2009 - 10:47 am
10 year Treasury yield at 3.82% Ouch. What now Ben?

Look at the session-delta in yield on the 2 and 3 years.

if i was a hedge fund manager and wanted to get out of my positions after the big puff up i would be thrilled at the idea that i could sell millions of shares in the final 5 minutes and not move the price down.

Oh goodie goodie...

We now have a "Pay Czar" that's going to watch after the Federal pursestrings~

Inverted Hammer of Thor (profile) wrote on Fri, 6/5/2009 - 9:41 am

With UE insurance paying for six months, and extended benefits for up to another six months, the vast majority of those who have been laid off haven't even had time yet to feel the pain. Not that being on unemployment is living large, but there is a world of difference between reduced income, and NO income. If, and very likely when, UE is double-digits at this time next year, I think there will be a very, very different attitude.

The fact the checks are still coming is the reason there aren't riots in the streets. They won't be able to stop, IMHO, and will pay benefits indefinitely to keep the rabble from taking matters into their own hands. After all, they're the government, what do they care how much tax burden they're imposing on the future? We have seventy times seven forms of moral hazard operating and no political will to change it, and they're all pointing the same direction. J6P and JaneSUV, though, are largely locked into the debt serfdom system thanks to their mutual lack of self-control, so the real political threat will be the unemployed and underemployed recent graduates and students, who have little or nothing to lose.

Kung.Fu.Panda (homepage, profile) wrote on Fri, 6/5/2009 - 10:52 am

2 yr T-note up about 180 points per ZeroHedge chart...that seems like a monster move.

Currently 257 by Bloomberg's web reports.

"Don't forget the entire higher-education complex. i would say that 90% of current students are the equivalent of subprime, but without any collateral."

Student loans are super-full recourse though, which might be better than the subprime collateral.

2 year yield now up 26.5 bp on session

Meanwhile on Bizarro World the talking heads are fighting over whether the recession ended in either April or May.

Oh, and California sends out heartfelt thanks to the other 49. I just found out we are paying our UE benefits out of a zero interest loan from Uncle Sugar. Not to worry, we are supposed to pay it back in 2011. We're good for it.

The yield curve is becoming a yield wall ...

Donner Dinner Party financially for 305 million?

I can seat you now...

yeap.
And shouldn't you be studying for the bar instead of reading CR? I know I should be.

jd2b: i'm actually in saigon for another 2 weeks. i did read up on some insurance law yesterday. what a yawner.

Hey! That's how I make my living, lad!

Who can afford to play golf now?

Class of 2009 might feel something similar to this right about now:

http://cirquedubebe.files.wordpress.com/2009/01/walle-20071217113148159.jpg

Society is about to take you for a wild ride (Wall-E is a movie from Pixar).

timmy: 23000 golf courses and golf clubs in the USA. Plenty of job opportunities there for graduates

The country club around the corner from me lost 70-80 families this winter - that was significant. They've done some cost cutting and opened up to the public for functions. The average age of the members has to be north of 60 years old. Rumor is that someone with $$ has invested a big chunk to keep them solvent. The clock is ticking - I don't see them surviving this. Although they've been around since 1924, so I'm probably wrong.

Lehman Brothers was around since 1850. YMWV

2 year fixed at +27.3 bp yield on session at 11am by Bloomberg web report.

Does someone here have realtime?

From WSJ - Economists React

The loss of 345,000 jobs in May — 0.3% of employment — makes this jobs report the second worst in a quarter century not including the current recession, but in today’s economy a loss of only 345,000 jobs is welcome news. –Heidi Shierholz, Economic Policy Institute

It's not just the numbers of jobs lost, as we lose more jobs, don't you have to start looking at the percentage of employment?

JD, you mean like Cheney?

At 9.4% unemployment and all the the hamster wheel low wage jobs out there, the globalists in America have screwed themselves.
People in those Wall-Mart wage jobs can't buy houses and new cars. Our country is so screwed and so are the ones who are responsible for making it this way.

Protectionism or a global minimum wage? Not sure how else you bring manufacturing jobs back to the US.

Fed to hire ex-ENRON lobbyist to bolster it's image in congress.

Fed Intends to Hire Lobbyist in Campaign to Buttress Its Image - Bloomberg.com 

Read today the recession is over. How do we know in a command economy ?

Can the Administration and the Fed (not the administration? LMAO) step away from PPIP & CMBS crucial asset price support function, since the recovery is in full swing now ?

YLSP,

Ya need a deputy... thats stimulus money i can get behind.... wow a triple entendre

KCoop, Thanks for the Autorefresh. Guess we have to say farewell to our old habits.

F5, F5, F5 the night away . . .

Pay Czar? "Special Master for Compensation"? Hook another suckling to the sow. Welcome to the plantation.

I just checked. Energyecon hasn't updated EMRATIO lately.

Here is a link from St. Louis Fed.

http://research.stlouisfed.org/fred2/series/EMRATIO/ 

No stimulus money for the U of I..YSLP apply for this and agree to work 3 months....

U of I pays 'inspiration officer' $112K for 9-month contract,

MOSCOW, Idaho. - Public records show the University of Idaho is paying a Minnesota consultant who spends less than two weeks a month on the Moscow campus $112,500 to serve as its "chief inspiration officer."

The Moscow-Pullman Daily News reports the university signed a contract with Magaly Rodriguez last year, paying her $12,500 a month as part of a nine-month contract that expires in June.

"I[t] now takes two incomes in many cases to support the household life style and mortgage payments. "

The anti-union cohort here should take note of the social consequences of driving wages to the bottom.

I wonder if killing the stock market would drive rates down?

You know, the trading arm of the government can kill the market in one second by doing nothing.

'Talking about a scorpion biting the rabbit, trying to carry it over the raging river. "It is in my nature, cannot help myself".'

Yep. sometimes I feel as if no one has figured out a way to run a highly-evolved, complex society without hitting a brick wall.

Re: Jas

Since the Treasury market started crashing, the word "dope" as part of an angry rant has appeared far less in the comments. I really don't miss it, either.

note that the s/p divvy yiled is actually at a neg spread to 10yr. Historical posuitive spread range is 200-550 bps since 1993. take the mid : asusme a biog move up in stocks and some in 10 or divergence? take your pick

Stuck market collapses > deflation expectations resume > rates go down

gapping 2 yr also crusihing the fed m2m. Also ff spiked through the target range yesterday I belive. Outside of refis demand for loans 0 -

Three dollars an hour on MainStreet and three thousand an hour on Wallstreet, bout right.

$3 an hour wages combined with $8 a gallon gas would mean most of America stayed put and didn't move around too much...

But I think they'd be:

Max Mad

Iceman, Yeah, I don't miss his rants either. Maybe he is selling his sacred cows now.

very astute otishertz.
Lots of mad dashing for the exits.

I've just written this on another website and maybe this make no sense but can someone please explain?

I don't know I'm only a Dutch guy but somehow these American unemployment figures strike me as being a bit funny.

The birth death rate model: Each month the Labor Department plugs into its employment number something called the Birth/Death Adjustment. Explained simply, this adjustment tries to take into account the number of jobs quietly created by companies being born, or jobs lost because companies go out of business.

The US is in a recession. I would say that a lot of small businesess would not be able to keep the head above the water. But somehow the NET of new companies and companies that went out of business, in big recession time have created an astonishing 227K new jobs!!

Without this incredible 227K the number from surveyed companies would have been 345 +227 = 572K of jobs lost in May 2009. So the surveyed companies have LOST 572K jobs and somehow the NET of new companies and bankrupt companies, have CREATED 227K of new jobs!!

"I[t] now takes two incomes in many cases to support the household life style and mortgage payments. "

The anti-union cohort here should take note of the social consequences of driving wages to the bottom.

Pavel,

I don't dispute that the decline in wages has driven many to dual incomes. However, in my middle class suburban utopia, it's not falling wages that drives the desire for two incomes but the quest for more disposable income to support a lifestyle far more grandiose than what our parents gave us. I am amaze at what people classify as needs and the willingness to leverage to obtain it.

The big "duh" enlightened moment of the day comes from this Bloomberg 'exclusive':

or if you dont look for the monsters in closest, they dont exist department.....

Bank Profits From Accounting Rules Masking Looming Loan Losses - Bloomberg.com 

"Bank Profits From Accounting Rules Masking Looming Loan Losses "

June 5 (Bloomberg) -- Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.

Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.

“With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

‘Bogus’ Profit

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

can we put some lipstick on Mortgage Pig (r)

Chart-Ruse is the favorite shade of lipstick for the Mortgage-Pig

The ECRI Weekly Leading Index increased to 113.5 for the week ending May 29 from an unrevised 111.9. The smoothed, annualized growth rate remained at -9.3%. With the exception of this week, the growth rate has been steadily heading higher, indicating a return to growth later this year.

Click here to view:
http://www.economy.com/dismal/pro/release.asp?r=usa_ecriwli&src=dd_immediate

Rising Rates: The Next Fed Meeting Will be Interesting

"I wonder if killing the stock market would drive rates down?"

otis, I've been thinking of this as well and think it could happen. It would accomplish several missions for the feds. Flight to safety would mean bonds up (yields down) but also stronger $US which would drive down oil. And to put the cherry on top with everyone being broke (due to falling equities) easier to ram through universal health.

BBAD to the loan. BBBBBbad to the loan.

On the day I was born, the bankers all gathered 'round
And they gazed in wide wonder, at the joy they had found
The Fed chair spoke up, and he said leave this one alone
He could tell right away, that I was bad for the loan
Bad to the loan
Bad to the loan
B-B-B-B-Bad to the loan
B-B-B-B-Bad
B-B-B-B-Bad
Bad to the loan

I broke a thousand covenants, before I met you
I'll break a thousand more baby, before I am through
I wanna be your debtor pretty baby, yours and yours alone
I'm here to tell ya honey, that I'm bad for the loan
Bad to the loan
B-B-B-Bad
B-B-B-Bad
B-B-B-Bad
Bad to the loan

I make a rich investors beg, I'll make a good muni steal
I'll make an old money trust fund blush, and make new money squeal
I wanna be yours pretty baby, yours and yours alone
I'm here to tell ya honey, that I'm bad to the loan
B-B-B-B-Bad
B-B-B-B-Bad
B-B-B-B-Bad
Bad to the loan

RIF,

Perhaps it is more apropos to say the "age of better than lowered expectations."

Obama appionts an Expectation Czar?

otis - agreed!

Another thing that has been bothering me is all this talk of BB going zimbabwe. Why? The banks have been bailed out with relatively strong dollars. If BB keeps printing those dollars become weak and then everyone loses.

Bernanke this week finally getting around to talking about fiscal responsibility gets me thinking that the bailouts going forward won't be quite as generous. My guess is BB QE's just enough to put the breaks on deflation.

If China let their currency float and oil prices stayed elevated, IMO a lot of products mfg by China would not be cost competitive vs mfg in the US any more. The end price of Chinese goods to US buyers would skyrocket. That would drive shift of mfg back to the US. This is one reason why China keeps the currency peg even though it results in them accumulating dollars.

@ Fiduciary Doodie at 12:14 - If you look closely, you'll see the Pig DOES have lipstick !!