Unemployment rate hits 9.7%

No matter how convoluted your logic, you can't change the fact that in a society, PEOPLE NEEDS JOBS! And yes, the present Administration is trying to downplay the importance of rising unemployment by fiddling with the figures.

And, by intending to marginalize the increadible significance of unemployment, and by ignoring people's pain and instead shoving a cold label at us such as "indicator", you show us that you'd much rather have the APPEARANCE of a good economy rather than good people having jobs.

Once you understand that, you may gain insight into how cold and unfeeling your post looks. I'm not going to hold my breath, though.

"lagging indicator"? What a very cold label.

Man: "Hey! I'm out of work and can't feed my family?"
Logicflux: "It's just a lagging indicator"

 

Wanted to quote this before you edited it. I know everyone makes typos but this one is particularly funny, maybe because it's all caps and it matches the tenor of the rest of your posts.

Um, the only thing I was "intending" to do was present a fact that showed you were wrong -- objectively wrong.

 

Corwin I completely agree with you.

 

Unemployment figures are both an absolutely critical component of the recession....and it is a lagging indicator. Its simply both.

The best thing one can say about unemployment at this point is that its not increasing as fast as it did in the first 18 months of the recession, starting in December '07.

Frankly, I think the money being spent by the Obama administration and described (by the Obama administration itself) as the stimulus is actually misnamed.

Its much more like like trying to plug an enormous number of holes in a ship at sea. Its being spread around in so many ways, many many of them trying to help out the people in the nation who are suffering the most: relatively small tax breaks to the people with the lowest incomes, increases in unemployment insurance, etc. That money helps out people who are hurting, and helps them keep their head above water, just barely.

The size of the "stimulus" is tiny relative to the overall loss of wealth, that creates jobs and is tiny relative to the size of the economy as a whole.

Actually some of that money has already directly helped in getting people hired, keeping people hired, or rehiring people who were fired as one can see in this article about teachers being fired and rehired.

Its a better story on employment than if there were no stimulus money. Los Angeles fired over 8,000 teachers and rehired over 6,000 due to the stimulus money. Tucson laid off 560 teachers but rehired 400 and Broward County, Florida laid off 400 and hired back over 100.

Its a net loss of jobs. Its just not as bad as it would have been without funds from the feds.

The fact is that the severity of this recession will continue to impact jobs in all areas of the economy. It takes lots of time to recover. If you don't believe that take a look at a graph I like to keep pointing to because it gives a long term look at how economic conditions move over time. The graph on the 2nd page shows that recovery in one of the most dynamic markets in the nation required 5-7 years before real growth could again occur

All the extremist right wingers that are spending all their energy criticizing Obama for every sneeze, cough, hiccup, etc by the economy simply have no idea what recovery really means in an economic recession of the scope we are facing.

 

I believe that things are slowly getting better. I said from the beginning that a little optimism would go a LONG way. People were scared we were headed to something similar to the Great Depression and stopped buying things. It hurt everyone. We'll see though, with people saying that we're coming out of this, we'll hopefully see businesses stop laying off people.

I don't think we're totally out of the woodwork though. It's a slow transition. Companies have been trying to keep their employee's employeed for as long as they can. But many of the companies have been losing money for months now.

So as an example, Mom and Pop's Grocery Store lost $300+ each month for the last 6 months. Last month was the last month that they could afford to keep all their employees and run their store under their "equalling" income. This month they only were only -$100. Still, they had to let go Bob out of the butchering department. See how this works? Even though we're pulling out of the recession and things have improved does not mean that the companies are out of the woodwork yet. It just means that things are getting better and people are starting to buy again.

 

Great description, PHP. That is a excellent example as to why unemployment continues to grow even as the overall downward cycle might be bottoming out.

 

zomg!!! You're both communists!!111

 

Sometimes I have to makes a fast post....

(honestly, I didn't even see it until I looked at it a few more times!)

So, let me correct myself and write:

PEOPLES NEED JOBS!
(there - better???)

 

People should recognize that the money being pumped into the economy is creating jobs. That is its goal and its working.

The reality is that the recession is so big and so overpowering that the efforts from the government are merely plugging holes, not magically changing everything.

Take a hard look at the data about teachers being rehired through "stimulus money" referenced above.

Approximately 10,000 teachers were fired in Los Angeles, Tucson, and Broward County, Florida. They were fired this spring at the end of the old school year and before the new school year. These people weren't fired in Dec. 07 when the recession started and when the first big loss of jobs were recorded. It occurred approximately 1 and 1/2 years later. Counties, cities and states had been hit by lower tax revenues. Each state had homes that were vacant, property values that were lower, and overall more unemployment meaning less spending and less local tax revenues. It took time for the negative impact of the recession to work its way from individual firings to less local government revenues to cutting local govt services.....and finally teacher firings.



Federal "stimulus" funds were used. Over 7,000 teachers were rehired in the 3 districts. That is a lot of jobs. That was a plus. People got jobs. Class rooms had more teachers and consequently already high student to teacher ratios were reduced a bit. That is a huge plus.

Meanwhile, 3,000 teachers were left without jobs. That is a negative. That is a perfect example of how the recession is working its way through the economy and continuing to result in job losses.

That is anything but Obama's fault. His efforts, and the "stimulus bill" resulted in 7,000 additional jobs. His efforts and the stimulus bill means more people working, more people paying taxes and classrooms with somewhat fewer students.

That is a big big plus. No it doesn't stop unemployment from rising but it puts a huge dent in what would have been a worse situation.

 

Except that it's not. It's not working. That's because the money is NOT being "pumped into the economy". The money is being pumped directly into government. It's purpose was to artificially inflate certain economic indicators so that, the economy appears to be improving ON PAPER, but it's failing IN REALITY.

You example of hiring schoolteachers is an example. These are NOT private sector jobs, teachers are GOVERNMENT JOBS, right?

The economy is appearing to improve ON PAPER because most of the private sector people moving money today are the wealthy who are buying up toxic or foreclosed assets. That's inflating indicators such as GDP and spending. If you look at the middle class, things are getting much worse there. That's because what's happening today is that the wealthy are cannibalizing the middle class, as I'd just described.

Look, the Democrats in Congress have spent enough money on "stimulus" in the past 18 months to give every household in America $27,000. Shouldn't that produce obvious results?

And still, unemployment, which is the only MEANINGFUL economic indicator, is STILL rising. The economy is STILL losing jobs - I think we lost about 260,000 jobs last month? And what do the Democrats say? "Yeah, we're losing jobs, but we're losing jobs more slowly". Translation: the patient is still dying, but dying more slowly. Small comfort to the family.

And, to put it politely, @earlpearl, your comments seem heartless and cold. You'd rather promote the appearance of an improving economy than show any compassion about people's real pain.

Anyone with any real sense of compassion would be worried about rising middle class unemployment.

 

@ Corwin:

1. The reason the government is basically supporting govt as opposed to private jobs...is that the private economy is in the pits. The essence of this financial/economic crisis is the worst that hit the US since the great depression. The underlying problems are dramatically worse than the most recent "worst recession" from the early 1980's. Look about 20% of all household wealth in the US was wiped out via home values collapsing and the stock market crash. Businesses lost about 1/3 of their wealth.

The private economy is in the pits. It continues to shed jobs. That process flows over time. The above example of teachers is an example of how that stuff flows. In that case local govts. saw less money after the initial crisis. There were drops in home values, RE tax assessments, less people working, less sales tax revenues, etc.

Alternatively look at the sales Fiscal Year End Sales of Accnture, one of the world's leading high tech consulting firms. Fiscal 4th quarter sales were way down from one year ago. Big businesses, their primary customers aren't buying their services. When the big businesses don't buy their services--Accenture moves forward by letting more people go.

Private demand for everything is down. Bingo. If you gave businesses money..they aren't going to hire people. The businesses don't have demand.

Alternatively, in the Bed Bath & Beyond example we looked at earlier...that company had miniscule better revenues than the year before. It is doing it with less people.

They aren't hiring. Frankly, they need to tighten their belts and work to build revenues and retained earnings if the private economy continues to suffer.

One thing about that company. They might well have lost their most serious biggest direct competitor...and sales didn't skyrocket. That shows how soft things are.

If the govt. keeps govt employees working...at least it keeps people off the unemployment lines.

That is an example of some progress. Its not great. Its merely less bad. In an incredibly horrible environment, less bad is better than the alternative. And putting people to work enables more money to flow into the private economy.

2. The calculation of equating govt. money spending as money that could be distributed to every household is a disservice to thinking Americans.

Most of that money went into shoring up the banking system. Last September the international banking system was inches from collapse. You think things are bad now? Think how bad everything would be with no money flowing anywhere.

The world financial system broke. When AIG guaranteed risk through derivatives it created a total credit risk whose size DWARFED THE ENTIRE WORLD ECONOMY/World gross domestic production.

Check out the following graph on the bottom of the page.

Check out the middle part of the graph. That is the liability size of those derivatives that were sold. It is bigger than the damn world economy.

Think of it. Our unencumbered, no regulation, financial system set something up....that should the system break down.....created more liabilities than the entire production of the entire world.

How f*cked up is that?

Most of the money spent by the govt. went into shoring up financial institutions. Nobody likes it. The m'fers that risked the economy into disaster are being backed up and supported.

Do you have a better idea?

Let that $2.7 -3 trillion go to families...big deal. The cash would have been worthless. Everything would have tumbled. Besides, Warren Buffett, Mayor Bloomberg, Bill Gates, and especially Rush Limbaugh don't need the money. Rush is trying to spend his wealth on a rich man's toy....a professional sports team.

Frankly, less well off people and poor people need the money to stay afloat.

3. Continuous and regular repetition of an incredible twisting of what is exemplified by extremist right wing political theory...by blaming Dems for what is innately right wing in nature....

Blaming Dems for not being for working people
Blaming Dems for coming up with schemes to hurt the other party....


All that is patently political bs. The Right Wing are the masters of those "crimes". If you want facts, I'll give them to you.

4. As for me. I am a business guy. I started out on the bottom. I was a worker. I went to college. I got a business degree. I took early jobs that sucked. I learned stuff.

I got into an industry where I could earn a lot. You know why I loved it? It was competitive. Winners and losers. It was commercial real estate. It intimately defines market economics. I did pretty well for a period of time.

Now I partner and run some businesses. We are having mixed results. One of our inventory turns out to be counter cyclical. We have had a reasonable run during the recession. That has been good because the others have all been hit badly.

How have things been?

A) We haven't laid off anybody.
B) Revenues are down.
C) Like other small business owners I now do stuff that I didn't have to do before because we can't afford to hire more people
D) Our counter cyclical businesses actually added some personnel in the recession and has done well. Our fingers are crossed. We don't expect that to continue. The extra money from that industry has worked to help the other businesses and is going into reserves to keep everything afloat for expected bad times.
E) We always meet payroll first and we always meet govt requirements. Then we make sure we have a great reputation for delivering service. Then after we've done all that...we do other things to try and grow the businesses.

In this economy we don't have the luxury of getting to the other stuff to really grow the businesses.


Finally, all the youthful complaining and politicizing of every move by this political side or that side is an enormous amount of hot air.

Do you want to see how long it takes to recover from a real serious economic downturn?

Feast your eyes on the graph on the second page of this link

The commercial real estate crisis basically hit the region shown in early 1989. For a couple of years supply (buildings) were being added because of projects started and financed before everything went to sh!t.

Then it stopped. People started building speculative office buildings again in 1998, 1999 etc.

It took about 10 years for things to recover. 10 years. That is what it takes for demand and supply to start cooking again in sinc. Maybe longer, hopefully shorter. Nobody knows.

I recall some guy I knew with a real estate business. I remember about 1990 he came up with the phrase...."stay alive til '95" It had a nice ring. He didn't know any better than me..but he knew things sucked royally.

This is a m'fer serious recession. You do what you can to stay above water. There are no quick fixes.

5. IMHO, In this very very tough environment, keeping 7,000 people off the unemployment lines is a positive, for the time being. Its not all rosy. It is govt spending and its debt. It means more debt. Right now, experience in business has taught me. Take care of today's problems. Stay alive. Deal with the other ramifications later.

6. If you do want to deal with the debt crisis right now...I have a simple solution. It has two parts. 1. tax a little bit more. 2. Spend less.

When it comes to spending less, my pretty much first priority is...1. Don't abandon Americans who are doing badly. Keep them afloat. --> Make the spending cuts elsewhere.

 

In the past three weeks I have been in 3 states. All of them have major highway projects underway, all accompanied with signs crediting Fed stimulus money.

That is a lot of blue collar workers that have jobs that otherwise wouldn't. These are not government jobs, although they are pubic works projects. And, they are good paying. I have a kid that is an apprentice heavy equip operator and making ~$27/hr (although he remains unemployed right now).

That money will trickle through the economy - what isn't vacuumed up by the Waltons et. al. that is.

 

@earlpearl, I normally don't take the time to completely read a long post like yours, but in your case I read it entirely. Thanks for the insights.

This part particularly caught my attention:

I'll give you the facts as to how the Dems badly broke the system and destroyed hundreds of years of law:

What happened is this: the reason why the economy is in the tubes today is that banks have radically restricted credit. They simply aren't lending. The reason why they aren't lending is that the banks are terrified of the Democrats in Washington.

I know, I know, this sounds blindly partisan. Let me briefly explain the two huge massive fears that today have banks terrified:

First, the present administration messed with existing loan contracts. They basically changed the contract terms of some loans, thereby nullifying existing contracts. This flys in the face of years of contract law history going back to the Roman Empire. It is the nullifying of existing contracts that has present bank credit managers cowering in their closets. No bank wants to make loans where this Federal government can tear up the contract without regard for contract law.

Let me repeat that, because it is a staggering indictment of the Democrats ineptitude: No bank wants to make loans where this Federal government can tear up the contract without regard for contract law.

Second, in January the newborn Obama administration forced the healthy and solvent Bank Of America (BOA) to buy the bloated and bankrupt Merrill Lynch. The PBS show Frontline did a one-hour show on how Obama forced BOA to buy Merrill, which began even before Obama took office (it's not uncommon for outgoing administrations to pave the way for the incoming administration's policies - watch the PBS Frontline episode)

BOA wanted to back out, but they were outright threatened by Obama if they didn't go through with the buyout. That included making hostile changes to existing BOA contracts and forcing the CEO of BOA to quit - which Obama then did anyway.

Result: 1 Bad Company + 1 Healthy Bank = 1 Massively Sick Bank

I'm not happy about writing a blatantly one-sided post like this, but in the end all the stupid things Republicans may have done before these two events were recoverable. But when the Democrats made the draconian and communist (first time I've used that word on DP) moves of messing with contract terms and forcing private companies to make acquisitions - how do we move past that? The Democrats broke hundreds of years of contract law. How do banks trust this administration when the government has the power to do it again?

The banks today remind me of the departments of a Fortune 500 company I once worked for that mistakenly hired a dysfunctional and meddling CEO - everyone is keeping their heads down and hoping not to get noticed.

For the economy to recover, the only issue that needs to be resolved is - how do the Democrats regain the trust of the banks? Sadly, it may take a new administration to do that.

 

Thanks, Rush, er Glen, er Corwin.

The biggest problem with your analysis is that the current "recession" since December 2007 - a full year before the Dems trounced the Republicans in virtually all National political races.

Regarding "contract law" - what do you think happens everyday in bankruptcy court? (Hint: contracts are torn asunder)

While uncommon, US industry has certainly experience significant governmental intrusions before.

1917 - All US railroads were nationalized
1939 - The Tennessee Electric Power Company was nationalized (Became the TVA)
1971 - US passenger rail service was nationalized (AMTRAK)
1976 - ConRail was essentially the nationalization of several bankrupt rail lines in the northeast.
1980's - As part of the savings and loan fiasco the Resolution Trust Corporation essentially nationalized the S&L industry
2001 - The then private airport security was nationalized (TSA)

If one wants to assign blame to politics, I would point out that the decade of failed S&L's was under the watch of Reagan, and the failure of investment banking took place under Bush II.

 

You're confusing the slide of the economy with the banking collapse. The decline in the economy - which began in 2006 when the Dems took Congress and, for example, raised the minimum wage (which ALWAYS raises unemployment) economy's sickness; however, unemployment never went higher than 6%. It's when the banks stopped lending that unemployment went into the toilet. It was the banking collapse that destroyed employment and cut the economy's head off.

That's called "due process" and follows the process of law. The Dems BROKE the process and extorted the CEO of BOA.

I'm going to politely ignore the unsupported and blindly political statements you made about events "under the watch" (how simplistic!) of Bush II and Reagan, and point out that at no time did any of the examples you cited even come close to messing with the fundamentals of the United States banking system.

I really think you should watch the Frontline episode. It will open your eyes.

 

Corwin, banks don't just fail one day. It takes a long period of mismanagement and poor risk assessment.

I remember reading warnings about unregulated derivatives at least 15 years ago.

The unsupported, overly simplistic and blindly political statements are that the current economic troubles can be traced to "the Dems". The fact is, the finance industry (banking and insurance) has escaped meanignful regulation for a very long time, and simple greed took over. Look to Greenspan and the laissez faire capitalism spawned by the objectivist followers of Ayn Rand and her ilk. Look to Reagan's rollback of banking regulations that had been in place since the great depression.

 

Corwin must think the defaulting on subprime mortgages just started happening last year.

Here's some articles from 2006:

http://www.rgemonitor.com/blog/roubini/162056/
http://realtytimes.com/rtpages/20061221_foreclosure.htm

Banks started to seriously feel the crunch at least by mid 2007. Anyone remember Jim Cramer's tirade about Bernanke not lowering rates? I believe it was in August 2007.

http://www.youtube.com/watch?v=rOVXh4xM-Ww

Corwin's pretty clueless when it comes to this stuff. Don't try too hard to get through to him.

 

Corwin:

You have presented an incredible twisting of actual facts. Your information is patently false. Its typical extremist right wing garbage. Even though the fundamentalist principles of right wing economics continuously screw up the govt...the politicos of the right wing are so intent on getting power they will say anything...regardless of the consequences.

What are the consequences? We have the worst financial crisis since the great depression. In some ways its worse. There is overwhelmingly more corporate, financial industry, and household debt now than in the 1920's and 1930's. We carry far more risk.

To start with your 2nd point; about Ken Lewis, who was the CEO and President of Bank of America

1. If anyone threatened and pushed Lewis into the purchase of Merrill it was Hank Paulson, Sec of Treasury under Bush. A Republican.

2. Ken Lewis first claimed that Paulson threatened him...and then totally retracted that statement in front of Congress.

3. Under investigation by Congress it was shown that Ken Lewis probably misled the Board of Directors shareholders of BOA with regard to Merrill.

The deal he made was subject to shareholder vote. He did not inform shareholders of significant losses before the vote. He well could have committed a civil crime.

Read this article concerning Ken Lewis's testimony before Congress, what he knew and when he knew it, and that he didn't renegotiate the purchase even knowing he had huge losses

and then read this article on how Ken Lewis was a poor CEO, underperformed other CEO's, and made bad money losing purchases including Countrywide. The guy was good at buying businesses and buying losses.

The Dems had nothing to do with Ken Lewis buying Merrill. They didn't bully him. They aren't thugs....and they are trying to work through the worst financial crisis since the Great Depression.

Point 1.

Bank (and lending) credit started to dry up all during 2008. Speak with business people, speak with borrowers. It crashed in September 2008 with the world financial system at crisis level. It was the result of a long period of creating financial and real estate bubbles.

Subsequent government actions were exactly like the process of bankruptcy. Excellent analogy, WillyB.

Corwin: You ever own commercial real estate with a commercial tenant that declares bankruptcy? I have. The lease can be nullified. Bingo. The property owner has no income. The contract is voided. (what's worse, is before rerenting the vacant space I had to spend money to get the former tenants cr@p out of there.

All you do is move forward. Write a new contract.

Contract law is not and has not been destroyed. Bankruptcy laws are a societal way to deal with a terrible situation.


The problems with the extremist right wing are the following:

1. They twisted the Reagan slogan..."Government is the Problem" and essentially argue that anything that you can tag with the word government is worse than Satan, Hell and Hitler combined. (Its a bit extreme isn't it?).

2. They characterize Dems as worse than Al Queda. They hate Dems worse than Al Queda.

3. The extremist right wing is desperate to be in power. They will say anything, do anything, twist anything to push their purposes

4. Their thinking is aligned with the myth of absolute free business without any regulation under any circumstances. (that myth is not even a part of basic economic theory). Its a terrible twisting of reality.

The last 3 recessions have all had some aspect of financial industry malfeasance that created bubbles, with the one around 1990 and this one totally subject to an unregulated, unwatched financial system creating a horrendous bubble.

The one in 2000 was partially fed by a bunch of businesses that lied about their financial results, creating false valuations that actually ended up in businesses that were failing. Besides the recession caused by the telecom and dotcom explosion around 2000 it was abetted by absolutely falsified financial statements that ended up in the Sarbanes Oxley regulations. A couple of the telecoms that imploded in that era included WorldCom and Adelphia. Their high stock valuations caused by fraud helped push up other telecom valuations and bubble growth that ultimately imploded.

You must have some kinds of business regulations. Its the same reason you need refs, umpires, teachers, cops, test monitors etc. Somebody has to control the cheaters.

 

Money taken from those that produce to create jobs for those that do not does not trickle anywhere. It drains away.

For money to truly trickle you need to give an incentive to those that produce to continue to do just that.

Where do you think the money for those government jobs/projects is coming from? The money tree.

Ignorance abounds...

 

Good to know that you don't consider construction workers to be producing anything. I assume that extends to factory workers, farm workers, et. al.

What is it that you are producing (besides hot air)?