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Toshi

Harbinger of Doom
Oct 23, 2001
31,651
3,845
there are several problems with the "we're ok and that's what i'm sticking with" line of thought:

1) with our fiat money system we NEED constant expansion in order to service existing debt.

2) unemployment is actually much higher in reality than the official U-3 figure, as my giant image in the OP demonstrates.

3) highly leveraged companies collapse like cards when losses exceed 1/leverage ratio. ie, 33:1 leverage means a 3% loss will bankrupt you.

basically i think we and the rest of the world really are in for a world of hurt.
 

Silver

find me a tampon
Jul 20, 2002
10,842
0
Orange County, CA
there are several problems with the "we're ok and that's what i'm sticking with" line of thought:

1) with our fiat money system we NEED constant expansion in order to service existing debt.

2) unemployment is actually much higher in reality than the official U-3 figure, as my giant image in the OP demonstrates.

3) highly leveraged companies collapse like cards when losses exceed 1/leverage ratio. ie, 33:1 leverage means a 3% loss will bankrupt you.

basically i think we and the rest of the world really are in for a world of hurt.
We're going to inflate that away.

I can't see a solution to the problem that doesn't involve some serious inflation. The Chinese are going to be pissed.
 

Toshi

Harbinger of Doom
Oct 23, 2001
31,651
3,845
We're going to inflate that away.

I can't see a solution to the problem that doesn't involve some serious inflation. The Chinese are going to be pissed.
what would make that even more fun is if we have deflation before the inflation hits... :clue:
 

dan-o

Turbo Monkey
Jun 30, 2004
6,499
2,805
I agree with you Toshi and we won't be able to stop job losses until the workforce is commensurate with the new economy. I do think "the economy" can re-set and function, even thrive, once the excess has been shed.

People will still need goods and services. This will require that people create them. Life goes on. Funding unemployment and creating new industry to absorb them is the difficult, long term part of the equation.
 

Toshi

Harbinger of Doom
Oct 23, 2001
31,651
3,845

dan-o

Turbo Monkey
Jun 30, 2004
6,499
2,805
I have more confidence in my vintage Magic 8 Ball than anyone in finance.
 

dan-o

Turbo Monkey
Jun 30, 2004
6,499
2,805
I dunno... as much as I hate to admit it... Stoney seems to have seen this one coming. I don't envy him being in a finance position, but his insights have been pretty decent.
He could see it coming b/c he was drinking appletini's with the guys who created and sold the toxic products.

Funny how none of those jackasses have a clue how to solve the problem.
Creating problems can be done by an idiot. It takes brains to solve them. Wall Street is curled up, whimpering in the corner.

e: After serving as jury foreman in federal court last year, regarding a fund manager who bilked retired airline/air force pilots of their retirement, I lost all respect for that industry. Biggest POS I've ever come across by a wide margin. He walked out of there a shattered man when we were done with him.
 
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Toshi

Harbinger of Doom
Oct 23, 2001
31,651
3,845
U-6 non-seasonal adjusted unemployment rate in Jan 2009... 15.4%

that's horrible.

U-6 Total unemployed, plus all marginally attached
workers, plus total employed part time for
economic reasons, as a percent of the civilian
labor force plus all marginally attached workers.
http://www.bls.gov/news.release/empsit.t12.htm

even sticking with the super-strict "published"/U-3 rate things look poor:

 

Toshi

Harbinger of Doom
Oct 23, 2001
31,651
3,845
bump for a related article describing the official manipulation of the published rates of unemployment and inflation:

http://harpers.org/archive/2008/05/0082023

Since the 1960s, Washington has been forced to gull its citizens and creditors by debasing official statistics: the vital instruments with which the vigor and muscle of the American economy are measured. The effect, over the past twenty-five years, has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed. If Washington’s harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it actually is.

[...]

Transparency is the hallmark of democracy, but we now find ourselves with economic statistics every bit as opaque—and as vulnerable to double- dealing—as a subprime CDO. Of the “big three” statistics, let us start with unemployment. Most of the people tired of looking for work, as mentioned above, are no longer counted in the workforce, though they do still show up in one of the auxiliary unemployment numbers. The BLS has six different regular jobless measurements—U-1, U-2, U-3 (the one routinely cited), U-4, U-5, and U-6. In January 2008, the U-4 to U-6 series produced unemployment numbers ranging from 5.2 percent to 9.0 percent, all above the “official” number. The series nearest to real-world conditions is, not surprisingly, the highest: U-6, which includes part-timers looking for full-time employment as well as other members of the “marginally attached,” a new catchall meaning those not looking for a job but who say they want one. Yet this does not even include the Americans who (as Austan Goolsbee puts it) have been “bought off the unemployment rolls” by government programs such as Social Security disability, whose recipients are classified as outside the labor force.
if you're not jamming your fingers in your ears and going "nyah nyah nyah" then you might benefit from watching chris martenson's crash course when you have 3.5h to spend:

www.chrismartenson.com/crashcourse

it covers all of these and much, much more, and ties them together.
 
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Toshi

Harbinger of Doom
Oct 23, 2001
31,651
3,845
Wouldn't that graph be more "accurate" if the job loss raw numbers were adjusted for total population? Or total working population? Because I'd imagine that there are a $hitload more people in the "workforce" now than there were in the 50's.
i hit up bls.gov and the size of the workforce has actually not changed _that_ much...