Third quarter GDP numbers have no relation to reality says John Williams of Shadow Stats. He believes that unemployment hasn’t really recovered from the 2001 recession. GDP has become a nonsense number, worthless in terms of having any meaning in terms of the real economy.
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15 million Americans are unemployed and looking for work. Discouraged workers that are not seeking employment are not counted in that total. The U.S. economy added 162,000 jobs in March, the biggest monthly net gain in three years, even though the published unemployment rate remains at 9.7 per cent.
The chart above shows job changes in this recession compared to recent ones, with the blue line representing the current downturn. The line has ticked upward, but still has a long way to go before the job market fully recovers to its pre-recession level.
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Unemployment is at a “26-year high” with 17.5 percent of formerly employed Americans that are no longer looking for work or underemployed. The unemployment rate for workers aged 16 to 24 is at 19 percent. The unemployment rate for young African-Americans at 30 percent. The average length of unemployment is at a record high as the ratio of job seekers to open positions is currently 6 to 1. This is dismal news for Americans. As their “patriotic duty” many firms are now telling their employees that hours must be cut in order to save jobs. No less than 60 million American households are living at or below the poverty level. The nation is not seeing real ideas or action that even remotely resemble the urgency and aggressive action when banks and investment firms needed saving.
Behind the scenes, political powerhouses and their talking heads hope that cheerleading will do the trick. Surely the talent of the American people will save us says the court jester of economics, Warren Buffett. I cite the CNBC party show that is sure to insult your intelligence. The economy and the American people don’t need upbeat civic cheerleading about greatness. The nation needs serious action outside of more wars overseas. We need to realize that we have war going on right here.
The nation can expect weak recovery of consumption and economic growth coupled with larger budget deficits. The nation can expect greater delinquencies in real estate and the continued fall in real estate prices. The nation can expect greater losses for banks and financial institutions across the board in all sectors and a corresponding rate of bank failures.
Noriel Roubini’s Global Economonitor says: “we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.”
Mr. Roubini says “that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.” This will put the real unemployment rate soundly past 18%. Last year, I predicted a real unemployment rate of 25%. Either way, the nation has some suffering to go through since the political powers that be firmly refuse to bail out the American people. The land of politics continues to bail out the world with free handouts and political programs. We can bankroll and void toxic debt for freewheeling investment bankers and financial geniuses that abused the system, but we can’t risk lowering the debt or responsibility of the American people without making them homeless. Clearly, the American people are simply too talented. Politics still needs slaves to grist the mill. We need martyrs for the cause. The nation has them while China gains mastery over the national economy. What will politics sell next?
You can now appreciate why the world of U.S. politics doesn’t want to end the wars in the Middle East. With all the men and women in the armed forces coming home, we really would be a nation without work.
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We live in exciting times. The stock market is up 100 points… or who knows what goodness corporate investors are blessed with today. Wall Street mavens and financial wizards are feeling giddy with delight. They want good times so badly that they are already deluding themselves that the recession is over and that runaway prosperity is in the wings. It’s time to start making money all over again the way “we” used to. After all, nothing has changed beyond massive cast infusions to hold up the system. Multitudes of banks, corporate mongers, financial wizards and wishful investors are convinced that we are about to relive heady good times without an ounce of reform or correction in the system that jack built. They may be right.
The longer reform takes, the less likely reform is to happen, at least if financial and corporate simple simons have their way. It’s time to stop pretending that the Wall Street economy is the same as the real economy that everyone lives in. Wall Street hasn’t met with total and final meltdown because the Wall Street economy has been rescued. They have lived to see another day because of government bailout, presumably at taxpayer expense. Yep, Wall Street seems to be showing signs of life along with the giddiness that goes along with having a future without any reform or consequences. A real party is set to ensue at the expense of all. The real economy that the rest of America lives is another matter altogether.
What is truly important where the economy is concerned is whether real Americans can find work. If Americans can’t find work or create work that they use to survive, the country is in trouble, pure and simple. 539,000 Americans lost their jobs last month after many months of ongoing successive unemployment disaster. Since the recession officially began in December 2007, 5.7 million jobs have been given the write off by government employment statistics. The reality is actually even worse.
Still, there has been plenty of impressive talk about the new world of reform that America will enjoy, but little has been done beyond the talk. Regulatory reform is dying on the government vine of important projects.
Geithner has quipped, “We are being dramatically more aggressive than I believe any serious government has ever been, certainly in generations, in responding to financial crises. So if you look at the scale of action, look at the quality of initiative we’ve taken, I think it dramatically exceeds even the best-managed crises we’ve seen before.” Ple-e-ze. The system continues just as before, but without any reform or any real ideas for reform that hold any substance. The Masters of the Economy can’t seem to wrap their minds around the banking deluge that has brought us to our knees, much less figure out a way to reform it. They just don’t want to rock the boat of monetary largess. Geithner told Congress that fixing the system would be accomplished not by “modest repairs”, but by “new rules of the game.” I agree that what is playing out between government, corporate bankers and central bankers is a game. That much is obvious.
People are watching. Are you? ~ E. Manning
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Fed ever hopeful
Desperate to be a financial cheerleader during the recession, Ben Bernanke insistently paints an economic picture of future light and in almost the same breath debate about the biggest “what if” about the so far dubious recovery. It isn’t that the American public doesn’t long for good news, but we aren’t going to be conned either. Records numbers of jobless Americans point to a real problem where recovery is concerned.
Experts continue to be fearful about government banking stress tests, as if banks are the only importance for a future recovery. Certainly, that is where the bulk of taxpayer money has been placed to keep the system operational and the American power structure in place.
The media easily reports both sides of the economic story, but mostly focuses on the negative and no wonder. The greatest reality is that an economic recovery is mostly in the minds of a few visionaries at this point. If the economy worsens, “big lenders” do not have enough money to survive. The media points the inevitable need to raise cash as a precaution. Now that is confidence in a recovery.
Government stress tests for finance put banks through two appraisals. One appraisal reflects expectations about the recession as it is and the other forecasts a recession deeper than what experts predict. The reality of the current recovery isn’t strong enough to be called that, but any glimmer of economic light has corporate promoters banging their gongs and playing the marching band in the hopes of stirring sentiment for a recovery.
Experts just can’t wait for the recovery as they now invent ways that the nation will recover and prosper while record numbers of Americans remain unemployed and homeless. The idea of home sales being on the increase has moneychangers truly excited for an abbreviated recovery and future corporate good times.
Investors and the public have been quite realistic about corporate finance. Stock prices, especially for banking institutions, have taken a beating. This has spurred the requirement for more capital to keep banks operational as investor sentiment continues to ruin them. The government has been there all along to prop up the system. As a result, there would seem to be little immediate fear for the system. The bottom line for investors and the public-at-large is the main concern and truly the main force behind ‘recovery’. The new brand of corporatism can’t stand the thought of needing the little guy for anything. They have a philosophical quandary on their hands.
What is truly sad is that economic cheerleaders want to convince us that the United States can have a recovery and enjoy good times again with record numbers of permanently unemployed Americans. The reality has set in that we are enjoying the fruits of our corporate policy of job exportation over the last two decades. Cheerleaders don’t want to acknowledge this reality. The new brand of corporatism and government wants to redefine unemployment and prosperity to fit a new mold that belies any logic. I’ll post more about this tomorrow.
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