In My December '08 "predictions" article I tapped unemployment to be the most severe problem on Main Street for 2009. The numbers, heavily fudged by the government, remain uniformly bad. While the "official" stat is now 9.5%, the U-6 figure is 18.7% and rising. This figure is the closest look at the real unemployment picture, because the official government number simply stops counting a person as unemployed once their insurance benefits run out, nor does it count underemployed or those forced to take part time work. It also has a strange guessing game formula for estimating cyclical job birth and death, not based on actual stats, but simply on a mathematical "guesstimate." Senior Psychometricians everywhere would certainly have a field day taking the government to task for their faulty statistics.
That 18.7% number means just over 30 million Americans are unemployed now, five people for every job opening now being reported! This is shocking unemployment. The numbers have blown away job loss figures from the last four recessions, which, by this time in the cycle, had already bottomed and were starting to show job growth. In fact, job loss is now accumulating at a pace that well ahead of that set during the Great Depression of the 1930s. Unemployment stood at 15.9% at the end of 1931, a full 26 months after the 1929 market crash--yet here we are, just 8 months after the great financial collapse of October '08, and our U-6 unemployment is already at 18.7%. Unemployment in the Depression didn't peak for two more years when it reached 24.9% in 1933, and stayed at 20% or higher until 1935. All bets now are that our own unemployment will challenge those figures as well, (with the U-6 stat).
The markets did not like the news today before the traditional 4th of July weekend barbecues. It dropped like a stone at the opening bell with the Dow losing 223 points in a session that closed 15 minutes late--with the ticker heading down in all of that overtime trading. The market has about squeezed all the juice it can out of the spring rally. It's reality time now.
Face it. You can have all the hope and optimism in the world, but the math for a recovery any time soon is just not there. We are in a situation now where the loss of your job brings you face to face with your own personal Great Depression in a heartbeat. People are locked into mortgages, still paying high rents from the inflated real estate boom, carrying huge amounts of debt on their credit cards. Most are just a paycheck or two from being broke. Finding a new job will be extremely difficult in this climate. So as housing values continue to decline, equity continues to evaporate, 401ks shrink month by month, the recovery is yet a long way off in this writer's opinion. This wealth deflation, and all those lost jobs, will prevent any rebound in consumer spending, and there goes 70% of the economy.
Now consider that massive $13.8 trillion dollar bailout funneled to the firms that created the collapse, the big banks and investment houses. Blogger Matt Tabbi had this scathing remark about it in his article for Rolling Stone. Speaking of Goldman Sachs, he wrote:
"The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere – high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth – pure profit for rich individuals."
I suppose the old saying that the rich just keep getting richer while the poor stay poor is so very true. There are now thousands more people, former middle class citizens, becoming the "Nouveaux Poor" in this country. Say buddy, can you spare a dime?
That 18.7% number means just over 30 million Americans are unemployed now, five people for every job opening now being reported! This is shocking unemployment. The numbers have blown away job loss figures from the last four recessions, which, by this time in the cycle, had already bottomed and were starting to show job growth. In fact, job loss is now accumulating at a pace that well ahead of that set during the Great Depression of the 1930s. Unemployment stood at 15.9% at the end of 1931, a full 26 months after the 1929 market crash--yet here we are, just 8 months after the great financial collapse of October '08, and our U-6 unemployment is already at 18.7%. Unemployment in the Depression didn't peak for two more years when it reached 24.9% in 1933, and stayed at 20% or higher until 1935. All bets now are that our own unemployment will challenge those figures as well, (with the U-6 stat).
The markets did not like the news today before the traditional 4th of July weekend barbecues. It dropped like a stone at the opening bell with the Dow losing 223 points in a session that closed 15 minutes late--with the ticker heading down in all of that overtime trading. The market has about squeezed all the juice it can out of the spring rally. It's reality time now.
Face it. You can have all the hope and optimism in the world, but the math for a recovery any time soon is just not there. We are in a situation now where the loss of your job brings you face to face with your own personal Great Depression in a heartbeat. People are locked into mortgages, still paying high rents from the inflated real estate boom, carrying huge amounts of debt on their credit cards. Most are just a paycheck or two from being broke. Finding a new job will be extremely difficult in this climate. So as housing values continue to decline, equity continues to evaporate, 401ks shrink month by month, the recovery is yet a long way off in this writer's opinion. This wealth deflation, and all those lost jobs, will prevent any rebound in consumer spending, and there goes 70% of the economy.
Now consider that massive $13.8 trillion dollar bailout funneled to the firms that created the collapse, the big banks and investment houses. Blogger Matt Tabbi had this scathing remark about it in his article for Rolling Stone. Speaking of Goldman Sachs, he wrote:
"The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere – high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth – pure profit for rich individuals."
I suppose the old saying that the rich just keep getting richer while the poor stay poor is so very true. There are now thousands more people, former middle class citizens, becoming the "Nouveaux Poor" in this country. Say buddy, can you spare a dime?
