The unemployment timebomb is quietly ticking
John Lemke
One dog has yet to bark in this long winding crisis. Beyond riots in
Athens and a Baltic bust-up, we have not seen evidence of bitter
political protest as the slump eats away at the legitimacy of
governing elites in North America, Europe, and Japan. It may just be a
matter of time.
By Ambrose Evans-Pritchard
Published: 8:45PM BST 04 Jul 2009
One of my odd experiences covering the US in the early 1990s was
visiting militia groups that sprang up in Texas, Idaho, and Ohio in
the aftermath of recession. These were mostly blue-collar workers, –
early victims of global "labour arbitrage" – angry enough with
Washington to spend weekends in fatigues with M16 rifles. Most backed
protest candidate Ross Perot, who won 19pc of the presidential vote in
1992 with talk of shutting trade with Mexico.
The inchoate protest dissipated once recovery fed through to jobs,
although one fringe group blew up the Oklahoma City Federal Building
in 1995. Unfortunately, there will be no such jobs this time. Capacity
use has fallen to record-low levels (68pc in the US, 71 in the
eurozone). A deep purge of labour is yet to come.
The shocker last week was not just that the US lost 467,000 jobs in
May, but also that time worked fell 6.9pc from a year earlier,
dropping to 33 hours a week. "At no time in the 1990 or 2001
recessions did we ever come close to seeing such a detonating jobs
figure," said David Rosenberg from Glukin Sheff. "We have lost a
record nine million full-time jobs this cycle."
Earnings have fallen at a 1.6pc annual rate over the last three
months. Wage deflation is setting in – like Japan. Interestingly, The
International Labour Organisation is worried enough to push for a
global pact, fearing countries may set off a ruinous spiral by
chipping away at wages try to gain beggar-thy-neighbour advantage.
Some of the US pay cuts are disguised. Over 238,000 state workers in
California have been working two days less a month without pay since
February. Variants of this are happening in 22 states.
The Centre for Labour Market Studies (CLMS) in Boston says US
unemployment is now 18.2pc, counting the old-fashioned way. The reason
why this does not "feel" like the 1930s is that we tend to compress
the chronology of the Depression. It takes time for people to deplete
their savings and sink into destitution. Perhaps our greater cushion
of wealth today will prevent another Grapes of Wrath, but 20m US
homeowners are already in negative equity (zillow.com data). Evictions
are running at a terrifying pace.
Some 342,000 homes were foreclosed in April, pushing a small army of
children into a network of charity shelters. This compares to 273,000
homes lost in the entire year of 1932. Sheriffs in Michigan and
Illinois are quietly refusing to toss families on to the streets, like
the non-compliance of Catholic police in the Slump.
Europe is a year or so behind, but catching up fast. Unemployment has
reached 18.7pc in Spain (37pc for youths), and 16.3pc in Latvia.
Germany has delayed the cliff-edge effect by paying companies to keep
furloughed workers through "Kurzarbeit". Germany's "Wise Men" fear
that the jobless rate will jump from 3.7m to 5.1m by next year. The
OECD expects unemployment to reach 57m in the rich countries by the
end of next year.
This is the deadly lag effect. What is so disturbing is that
governments have not even begun the spending squeeze that must come to
stop their countries spiralling into a debt compound trap.
French president Nicolas Sarkozy, with a good nose for popular moods,
says: "We must overhaul everything. We cannot have a system of
rentiers and social dumping under globalisation. Either we have
justice or we will have violence. It is a chimera to think that this
crisis is just a footnote and that we can carry on as before."
The message has not reached Wall Street or the City. If bankers know
what is good for them, they will take a teacher's salary for a few
years until the storm passes. If they proceed with the bonuses now on
the table, even as taxpayers pay for the errors of their caste, they
must expect a ferocious backlash.
We are fortunate that the US has a new president enjoying a great
reservoir of sympathy, and a clean-broom Congress. Other nations must
limp on with carcass governments: Germany's paralysed Left-Right
coalition, the burned-out relics of Japan's LDP, and Labour's death
march in Britain. Some are taking precautions: Silvio Berlusconi is
trying to emasculate Italy's parliament (with little protest) while
the Kremlin has activated "anti-crisis" units to nip protest in the
bud.
We are moving into Phase II of the Great Unwinding. It may be time to
put away our texts of Keynes, Friedman, and Fisher, so useful for
Phase 1, and start studying what happened to society when global
unemployment went haywire in 1932.
"Call Marcia Law. Tell 'em you mean business!!!!!!!!
Michael Coburn
> The unemployment timebomb is quietly ticking
>
> One dog has yet to bark in this long winding crisis. Beyond riots in
> Athens and a Baltic bust-up, we have not seen evidence of bitter
> political protest as the slump eats away at the legitimacy of governing
> elites in North America, Europe, and Japan. It may just be a matter of
> time.
GEE!!! Maybe Marx was right!!! We will have the proletariat rising up
against the capitalists
http://en.wikipedia.org/wiki/Dictatorship_of_the_proletariat
> By Ambrose Evans-Pritchard
> Published: 8:45PM BST 04 Jul 2009
>
> http://www.telegraph.co.uk/finance/comment/
ambroseevans_pritchard/5742937/The-unemployment-timebomb-is-quietly-
ticking.html
>
> One of my odd experiences covering the US in the early 1990s was
> visiting militia groups that sprang up in Texas, Idaho, and Ohio in the
> aftermath of recession. These were mostly blue-collar workers, – early
> victims of global "labour arbitrage" – angry enough with Washington to
> spend weekends in fatigues with M16 rifles. Most backed protest
> candidate Ross Perot, who won 19pc of the presidential vote in 1992 with
> talk of shutting trade with Mexico.
>
> The inchoate protest dissipated once recovery fed through to jobs,
> although one fringe group blew up the Oklahoma City Federal Building in
> 1995. Unfortunately, there will be no such jobs this time. Capacity use
> has fallen to record-low levels (68pc in the US, 71 in the eurozone). A
> deep purge of labour is yet to come.
Yes.... The "militia" silliness is NOTHING compared to the homeless
people rioting in the streets and carrying the suit wearing people to a
tree and hanging them.
<<<<<<<<<<<<<<< lots of statistical droning deleted >>>>>>>>>
> The message has not reached Wall Street or the City. If bankers know
> what is good for them, they will take a teacher's salary for a few years
> until the storm passes. If they proceed with the bonuses now on the
> table, even as taxpayers pay for the errors of their caste, they must
> expect a ferocious backlash.
>
> We are fortunate that the US has a new president enjoying a great
> reservoir of sympathy, and a clean-broom Congress. Other nations must
> limp on with carcass governments: Germany's paralysed Left-Right
> coalition, the burned-out relics of Japan's LDP, and Labour's death
> march in Britain. Some are taking precautions: Silvio Berlusconi is
> trying to emasculate Italy's parliament (with little protest) while the
> Kremlin has activated "anti-crisis" units to nip protest in the bud.
>
> We are moving into Phase II of the Great Unwinding. It may be time to
> put away our texts of Keynes, Friedman, and Fisher, so useful for Phase
> 1, and start studying what happened to society when global unemployment
> went haywire in 1932.
>
> "Call Marcia Law. Tell 'em you mean business!!!!!!!!
"And the times, they are a chaaaangiiin"
The peaceful realistic solution is to mandate a cut in the work week that
will create the need for more people in the work force. The wages can
come down some in real terms but not in dollar denominated terms. (i.e.
wage push inflation is needed) because of the housing prices.
The objective is to fight the unemployment caused by OVER production.
Of course, in order to do this you must separate health care insurance
from the employment.
--
"Those are my opinions and you can't have em" -- Bart Simpson
Pers3id
news:fcc392d8-a22a-4fee...@p18g2000pra.googlegroups.com:
> The unemployment timebomb is quietly ticking
>
> One dog has yet to bark in this long winding crisis. Beyond riots in
> Athens and a Baltic bust-up, we have not seen evidence of bitter
> political protest as the slump eats away at the legitimacy of
> governing elites in North America, Europe, and Japan. It may just be a
> matter of time.
>
> By Ambrose Evans-Pritchard
> Published: 8:45PM BST 04 Jul 2009
>
> http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/57429
> 37/The-unemployment-timebomb-is-quietly-ticking.html
>
>
> The Centre for Labour Market Studies (CLMS) in Boston says US
> unemployment is now 18.2pc, counting the old-fashioned way.
>
> This is the deadly lag effect. What is so disturbing is that
> governments have not even begun the spending squeeze that must come to
> stop their countries spiralling into a debt compound trap.
This will end badly. This has barely begun, and the governments
are spending like drunken sailors, when too much credit/money is
what caused this. It's like treating alcoholism with another
5th of bourbon, crack addiction with just one more shot to the
arm.
Perhaps woofy can think happy-happy joy-joy thoughts (in
between his fits of incoherent alcoholic rage) and just wish
us into prosperity.
> "Call Marcia Law. Tell 'em you mean business!!!!!!!!
Marcia Law will be paying us a visit regardless.. she knows
when her services are needed.. Melissa Soupkitchen might
also find some work.
--
*** Blow the Whistle on Financial Fraud ***
http://www.zerohedge.com/node/988
Don't contact SEC or FINRA since they are turning a
blind eye to the fraudulent activity. Contact Zero
Hedge instead.
Nickname unavailable
>
> Don't contact SEC or FINRA since they are turning a
> blind eye to the fraudulent activity. Contact Zero
> Hedge instead.
the article was pretty good, except the spending part. to cut back
now, would mean a implosion which we may never rebound from. the real
problem is who the money is being spent on. if the trillions that was
spent on less than 1% of americans, was spent on the other 99%, we
would be in much better shape, and on the road to healing.
germany took the advise of the conservative crank economists, and cut
back spending on social programs. the crank theory was, and still is
being barked today, is that the desperate worker would take any job,
no matter what it paid, and then they would slowly work off their
debt, and be healed.
of course you have to have demand, which is wage driven, to have
jobs, even poorly paid jobs, so no jobs, and the desperate german
worker did pick another choice, his name was hitler.
its not the spending in a deflationary spiral that matters, because
deflation eats up the credit faster than it can be injected, what
matters most is who the money is spent on.