12/06/10 Kuala Lumpur, Malaysia – We arrived at the Oberoi Hotel in Mumbai after President Obama had left.
As we were leaving, President Sarkozy was arriving.
It is a Grand Hotel. They come. They go. Nothing ever changes.
One of the problems with traveling so much is that you spend much of your time in a jet-lag fog. It was hazy when we left Mumbai. It is hazy in Kuala Lumpur. Was it the weather…or us?
But when we read the news, our eyes opened wide. Friday’s jobless numbers were shocking.
The latest figures show unemployment increasing, not going down. Here’s the New York Times write-up:
The United States added a total of just 39,000 jobs last month, down from an upwardly revised gain of 172,000 in October, the Labor Department reported on Friday. With local governments shedding jobs, the additions in the private sector were too small to reduce the ranks of the unemployed or even to keep pace with people entering the work force.
The unemployment rate, which is based on a separate survey of households, rose to 9.8 percent in November. It was the highest jobless rate since April and up from 9.6 percent in October.
The outlook remains bleak. More than 15 million people are out of work, among them 6.3 million who have been jobless for six months or longer. Many are about to exhaust their unemployment benefits, which have been extended repeatedly by the government because of the severity of the downturn.
The latest snapshot of the labor market cast a pall over what had been a brightening picture of a steadying economy.
The stock markets shrugged off the report, which was well shy of the forecast for a gain of 150,000 jobs, as all the major indexes rose slightly on Friday.
Part of the surprise in the November report was that layoffs, which had subsided earlier this year, picked up again. The number of people who were unemployed because they had been laid off or had concluded a temporary assignment increased by 390,000.
We don’t want to rub it in. But “we told you so” springs to the lips like a cup of beer to a football fan.
Meanwhile, the housing market is weakening. The Case Shiller index shows prices in such hot-spots as Phoenix and Las Vegas, at the lower part of the market, down by more than 40% – and still dropping. Some of them are now below their levels of 10 years ago.
So how can you have a real recovery when…
A) Fewer people have jobs (less household income)?
B) The average household’s major asset is losing value?
But heck, this is fantasyland now. Anything can happen. The feds are bailing out the banks all over the world…and entire countries, too.
Investors actually bid up stocks slightly even after the employment news.
The Dow rose 19 points on Friday.
Gold rose $16.
“What would you recommend to our viewers,” asked a Bloomberg reporter in Mumbai yesterday.
“Well, I don’t make recommendations,” we replied. “Especially not to Indians.
“But there are some periods and some places when it makes sense to be positive and optimistic…and there are times and places when it doesn’t.
“If you’re an Indian investor, I think you can be generally positive about the financial future. Yes, there are bound to be more crises…more corruption scandals…and more disasters. But there’s a trend going on that is probably too big to stop. It’s regression to the mean. India is catching up with the West. Wages are growing at maybe 15% per year. The stock market goes up almost every year. And many companies – in terms of growth – are still very cheap.
“The population is growing fast. The economy is growing fast. There’s plenty of capital for investment. There is plenty of knowledge and skill. There is no reason why this growth can’t continue for many, many years…
“So, an Indian investor can be optimistic. He should be optimistic. He should want to own a piece of that growth…a piece of the future.
“Alas, the situation is very different in the developed world…especially in the USA.
“The US and Europe are struggling just to stay in the same place. They’re mature societies…with populations that are getting old and economies that are largely worn out. In Europe this year, for the first time ever, more people will retire than join the workforce. And in America, the Social Security fund, for the first time ever, will pay out more than it takes in. These are two major developments. They signal the beginning of the end.
“I saw in the paper that China just set a new record with a passenger train that goes 300 mph. But almost all records are being broken – and they’re being broken in China or another ‘emerging’ market. The biggest, the most, the fastest…it’s all happening. But it’s not happening in the old, developed world.
“I think it was Karl Lagerfeld who noticed that Asia today is the New World. America and Europe are now part of the Old World.”
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
No doubt India will claw its way out of the cesspool and enjoy huge economic gains in the years ahead. But its dependence on the west is much greater than China, hence when the economies in the west finally rupture and the western currencies are swept away, much of India’s advantage will be swept away with it. China has the same exposure to a lesser degree. My instincts tell me it will be the countries with the greatest growth in local consumption (South America) the past few years with lower dependence on exports, that will thrive in the next decade.
Unfortunately China and India have modeled themselves on the western view of development and progress, which is environmentally unsuited to the high population densities in these countries. We can expect the boom to end up in a serious crash in a decade or two. Indians have just started aping the west, and life-style illnesses (diabetes, heart problems, cancer)are already a big issue.
What about Japan, vdv?
And Netherlands?
they can have it, we can handle that, but please, pretty please take our politicians
The private sector may add jobs to America, or not. The private sector may find refuge and security in China and India, or not. We may collapse individually, together, or not at all. We will see. However, it is up to the will of the private sector to pull Americans back from the precipice. I do not have faith in the private sector.
I know that “the numbers don’t lie” and it’s important to be aware of trending for investment opportunities, but sometimes the opinion-makers actually “create news” and influence outcomes, so full disclosure as to where an editorialist was invested would be very illuminating. I recall after the recovery from the ’00 recession journalists were claiming the US as a “Hyperpower” -with great hubris! When are these people going to A) Recognize when their writings lack wisdom, they are either misleading or diminish their claims B) Learn how to take a long view on issues a historically informed view that encompasses more than just the the next election. Am I asking too much of the public discourse? Let’s stop self-flagellation and get our folks back inspired to take on the trials of this time. With a motivation to learn from the economic mistakes of our selfish financial autocracy on Wall street (From which we have yet to effect true justice) a revision of how traders consider the morals of their decisions instead of just the goal of greed, profit, and expansion whatever the cost which can only lead us to the next crash. Let us prove that in the 21st century, we really are a wiser & more mature society that has learned from it’s mistakes and will now boldly move forward with innovations in new markets to prove to the world that the American Century has just yet begun.
new world does not always materially impact the end result, specially when properly analyzed. I just want to say how much I enjoy this information. Another good post Bill.