Unemployment report - October 2009
Wish there was some good way to spin this, but the economy is drifting in a very predictable fashion as the mailinvested post-boom sectors are beginning to contract.
U-3: 10.2% up from 9.8% (The fake good number you will hear about)
U-6: 17.5 up from 17% (The real bad number you will not hear about)
The problem lies of course in two major fallacies of mainstream economists and politicians. First being that a contraction after a policy of easy money is somehow avoidable and could be alleviated through government intervention. Second being that intervention at worst case will simply not help.
Both wrong, dramatically wrong. A contraction must happen because the country was engaged in activity that made no sense. We made too many cars, houses, goods, etc and could not actually afford them. From the year 2000 wages have pretty much remained stagnant while houses doubled and car ownership saturated to a point where there were 2.4 cars for every household! That is a bubble and it has to pop.
Bush began the intervention with a small bailout that did nothing, then a horrible and criminal giveaway to the banks via TARP. This immediately halted the crash/contraction/implosion that should have so sorely happened. Obama then continued with massive infusions into the housing market and hundreds of billions via the infamous 787 Stimulus package. Yesterday another 40 billion dollars was squandered in what will be a massive failure of attempting to prop up the housing market.
We saw from the previous GDP report that personal incomes are going down while taxes are going up. Government is continuing to consume while the American citizen is saddled with credit card debt and a reduction of spending ability.
This is a recipe for a disaster - we are reliving the Great Depression. Big banks are continuing to loot and steal from us, government is complicit and taxes are rising (at least the big banks were broken up). I find it truly hard to believe that with all the books and material written about the 1930s that we would actually embark on the same journey.
So very sad.
Karl Denninger has a custom unemployment chart, which shows boths annual and monthly changes. While the data only goes back to 1999 we can see the profound difference between what is happening now and 2002. Note that in 2002 we should have been contraction for the expansion that began in 1987 under Greenspan's watch, but were not allowed to as Greenspan once again flooded the system with cheap credit and set the housing boom on fire.
U-3: 10.2% up from 9.8% (The fake good number you will hear about)
U-6: 17.5 up from 17% (The real bad number you will not hear about)
The problem lies of course in two major fallacies of mainstream economists and politicians. First being that a contraction after a policy of easy money is somehow avoidable and could be alleviated through government intervention. Second being that intervention at worst case will simply not help.
Both wrong, dramatically wrong. A contraction must happen because the country was engaged in activity that made no sense. We made too many cars, houses, goods, etc and could not actually afford them. From the year 2000 wages have pretty much remained stagnant while houses doubled and car ownership saturated to a point where there were 2.4 cars for every household! That is a bubble and it has to pop.
Bush began the intervention with a small bailout that did nothing, then a horrible and criminal giveaway to the banks via TARP. This immediately halted the crash/contraction/implosion that should have so sorely happened. Obama then continued with massive infusions into the housing market and hundreds of billions via the infamous 787 Stimulus package. Yesterday another 40 billion dollars was squandered in what will be a massive failure of attempting to prop up the housing market.
We saw from the previous GDP report that personal incomes are going down while taxes are going up. Government is continuing to consume while the American citizen is saddled with credit card debt and a reduction of spending ability.
This is a recipe for a disaster - we are reliving the Great Depression. Big banks are continuing to loot and steal from us, government is complicit and taxes are rising (at least the big banks were broken up). I find it truly hard to believe that with all the books and material written about the 1930s that we would actually embark on the same journey.
So very sad.
Karl Denninger has a custom unemployment chart, which shows boths annual and monthly changes. While the data only goes back to 1999 we can see the profound difference between what is happening now and 2002. Note that in 2002 we should have been contraction for the expansion that began in 1987 under Greenspan's watch, but were not allowed to as Greenspan once again flooded the system with cheap credit and set the housing boom on fire.
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