By Ian Mathias
11/08/09 Baltimore, Maryland – We’ve said it before, and again and again, but it still bears repeating: The real barometers of this recession are employment and housing… and both fronts aren’t looking so hot today.
More than one in every 10 Americans is out of work, the Labor Department reluctantly reported this morning. The official unemployment rate jumped from 9.8% to 10.2% in October. Not only is that the highest in 26 years, but it blew Wall Street clear out of the water — they had priced in a rise to 9.9%.
The Labor Department announced more job losses than expected as well — 190,000 lost jobs, instead of the anticipated 175,000. The number puts to rest a desperate hope from a few months back — that August’s surprisingly small job loss would mark one of the final months of contracting employment.
That brings the total to 15.7 million officially unemployed Americans, a record 35.6% of which have been out of work for more than six months.
The U6 unemployment number — our preferred gauge, which includes a broader section of the jobless and underemployed — soared half a percentage point in just one month, to a record 17.5%.
“Help-wanted advertising is contracting,” reports John Williams of Shadowstats, with one of his preferred employment metrics. “The Conference Board’s newspaper help-wanted advertising index for September (a leading indicator to October’s employment report) fell to a new record low of 9, from the prior low of 10 that had held for the preceding four months. This new 58-year low is a very negative…Read more…
By Rocky Vega
11/07/09 Stockholm, Sweden – In a perspective today on the record level of job losses, an IBD editorial asks, “Will it ever occur to our leaders in Washington that what they’re doing isn’t working – and may actually be damaging our economy?”
It’s a rhetorical question, of course, as it goes on to describe, “The spectacular failure of the so-called fiscal stimulus to stimulate anything other than economic misery.” It’s misery driven by the concern that we’re on “a slow-growth path that will lead to permanently high joblessness, weaker income growth and fewer opportunities.”
Why are we potentially facing a future of permanently fewer jobs? The problem and solution can both be found in American entrepreneurship. Entrepreneurs are critical job creators and right now they have many reasons to be fearful about their ability to find an upside in the current economic climate. The government is meddling deeply in how the private sector functions. This means that the upside of starting a new, successful company is now much less clear that it’s been in the past. Even if an entrepreneur starts a home-run business, he or she still could confront “higher income taxes, a flood of stiff new regulations and the possibility of at least $2 trillion in new taxes related to cap-and-trade and a health care overhaul.”
Government talking heads repeatedly say that stimulus is working, “but no evidence shows that’s true. Stimulus has failed.” Based on the economy, and especially unemployment, “Time has come for a dramatic change of course.” According to this article, in order to save jobs the nation should look…Read more…
By Bill Bonner
11/07/09 Beunos Aires, Argentina – Governments are running breathtaking deficits…and accumulating alarming debts. Japan has a national debt of nearly 200% of its GDP. Where did that debt come from? It came from 20 years of trying to buy its way out of a slump with borrowed money. Of course, it didn’t work. But now, Britain and America are following the Japanese lead…and the Japanese are still at it! At the present rate, Japan’s government debt will grow to 300% of GDP in 10 years. America’s debt could grow to 100%…and then 200% of GDP…over the next decade (depending on whose projections you believe). And Britain, if we read the report in The Financial Times correctly, will have debt equal to 200% of GDP within 3 years.
Just what kind of crisis do these numbers portend? It’s hard to say. Probably a combination of confidence, followed by debt default and inflation.
Would the US actually default? We agree with Paul Samuelson; the answer is ‘maybe.’ Samuelson, writing in The Washington Post:
“The idea that the government of a major advanced country would default on its debt – that is, tell lenders that it won’t repay them all they’re owed – was, until recently, a preposterous proposition. Argentina and Russia have stiffed their creditors, but surely the likes of the United States, Japan or Britain wouldn’t. Well, it’s still a very, very long shot, but it’s no longer entirely unimaginable. Governments of rich countries are borrowing so much that it’s conceivable that one day the twin assumptions underlying their burgeoning debt (that lenders will…Read more…
