Compared to 5 and half years ago- we’re now back to where we started. Compared to ten years ago, stocks have averaged only a .6% increase in value. And for giddy investors there’s always this helpful MarketWatch headline: Legendary Hedge-Fund Manager: This Will End Badly.
What are the markets so exuberant about anyway? Unemployment at 8%? Adjusted for inflation, your take-home pay buys 8% less than it did in 2007. Last time we hit record highs on Wall Street your home was worth 26% more than it is today and that’s counting a recent housing rebound. Some 14 million homeowners still have property that’s worth less today than when they bought it. Mark Gongloff has all the stats in this piece in the Huffington Post.
Perhaps the markets are responding enthusiastically to that newfound spirit of compromise on Capitol Hill? Oh- that’s right, we’re still careening from one manufactured budget crisis to the next.
All these reasons for the stock market not to be happy worry me. It’s a nice fantasyland if you’re lucky enough to have a 401k or an IRA- but if you don’t- this little roller coaster ride means nothing except that a bunch of rich people are doing better than you…and even at that- they’re only standing still.
Hate to be the skunk at the garden party, as they say. And I’ll take the rally since the alternative really sucks. But careful out there…irrational exuberance has bitten us in the derriere before.
History has shown us that it is not a wise thing to bet against America. It’s a pretty resilient country. And though millions are still without work, the housing crisis continues and Europe may yet be unable to contain its debt crisis, Friday’s unemployment report has significantly surpassed most economist’s expectations and offers more than a glimmer of hope that a recovery is actually taking hold.
The job gains were impressive and across all sectors of the American economy. There have now been five consecutive monthly drops in the national jobless rate and the 8.3% figure represents a three-year low in the unemployment number. Wall Street seems impressed and the Dow Jones is now flirting with the 13,000 mark.
The political implications are huge. It’s estimated that if the current monthly gains of over 200,000 new jobs continues until election day, the jobless rate in November may well come in at just under 8%. It’s a significant number. No incumbent President has ever been re-elected with a jobless rate over 8%.
For Republicans seeking the presidential nomination and centering their campaigns on a cratering American economy, there are still enough weak points and looming threats to the nation’s finances to make a case but there’s also a political danger. It is not an advantageous position to appear to be rooting for the continuing demise of the American economy. It is not a “morning in America” message and it threatens to make President Obama the optimist and Republicans the party of gloom-and-doom.
There is an obvious pivot that can be made to other issues and they are also important ones to be settled in a campaign. The debate over the size of government. The arguments of over-regulation versus government protection of consumers and the environment, for example. There’s the continuing danger of massive budget deficits.
But there’s a ritual that occurs on the morning of the first Friday of every month. The current leader of the Republican party, House Speaker John Boehner, releases a public statement on the latest jobless report. For five straight months now, he’s had to say, in essence, we’re glad things are looking up but the situation is still dire. How long that message continues to resonate if the string of positive economic news continues, could well end up determining who gets to live in the White House for the next four years.
I took a few days off and unplugged from the world a bit. As I read back in to our political and cultural discourse today, I see 7 out of 10 news stories are about Congressman Weiner’s sexting and Sarah Palin’s version of Paul Revere’s midnight ride.
I understand the spectator appeal of both stories; we’ll call it the car crash syndrome- not pleasant to look at but impossible to resist. But really, Washington Post- five different Weiner angles? “Weiner’s District Debates His Future,” “Wives Increasingly Skip Public Confessions,” “Weiner Takes Mortification 101,” “Anthony Weiner’s Apology-Fest,” “Breitbart Inserts Himself in Weiner Drama.” Daily Beast/Newsweek is similarly obsessed with 4 of its top 10 stories concentrating on some iteration of All Things Weiner.
The Post also weighs in mightily with the continued brou-ha-ha over Sarah Palin’s historical boo-boo she insists was not a mistake about Paul Revere
blowing whistles firing shots and ringing bells to warn the British not to take away our guns or something. We have “Don’t Know Much About History,” “Fight Brews on Paul Revere Wikipedia Page,” “Palin Once Again Disregards the Facts,” and “Sarah Palin Gallops Toward 2012.”
You know, in about two months this nation faces the very real possibility that it will default on its debts for the first time in its history. What’s that- a 1000-point stock market crash? We have a stalled recovery and a public frightened at the potential consequences of continuing job losses. Folks are paying up to $200 a month more to gas up their cars. The housing crisis continues unabated.
I understand the last question asked at Anthony Weiner’s news conference was, “were you fully erect?”
Beyond being disgusted, I thoroughly do not care. My 401K? Job security for my friends and family? Can I ever afford to buy a house again? Can I get my kid through four years of college? That’s the kind of stuff I care about. Call me Weinered out. Can we please get serious about things that actually matter?
It’s anecdotal, but I have no less than six friends who have lost their media jobs over the past month or so as the carnage in the broadcast industry continues. It’s like an entire craft is being sacrificed on the altar of scaled-back recessionary budgets and tumultuous change.
I swear these companies have it down to a science now. Find the biggest salaries generally belonging to the oldest workers, sprinkle in an under-40 here and there so you can deny “pattern and practice” in case anybody wants to sue for age discrimination and- there you go….another budget-target hit. Until the next round.
Having been through this process several times myself, I can tell you it’s not a lot of fun, though it’s not completely a horror show either. If I lose my current media job, the only secure employment prospects seem to be in job counseling. So consider this practice.
There are stages of grief just like recovering from the death of a family member or friend. There’s nothing quite like that 1st week of joblessness when you wake up in the morning, remember what the deal is, and shake your head in disbelief. But there are things you can do that bring some sanity into the picture.
The two biggest things are dealing with the psychology and the finances. In lay-off parlance, “separation” is exactly that. You’ve been separated from a world full of friends and colleagues and there are natural feelings of isolation. If you’re the main bread-winner, you get the additional layers of feelings of guilt and inadequacy. I now give myself about one and a half to two weeks of self-pity. But that’s it. Then it’s time to move on.
As for the finances, my very, very first action is always to do a budget reality check. You measure up your spending habits against all of your assets, retirement money included. Since most layoffs involve older workers, you’re likely to be better off than you might have thought if push comes to shove. It’s always a nice relief to know you’re not going to be living out of a cardboard box.
There is a strange dual psychology that develops in which both the world of great possibilities and the reality that they haven’t come to fruition yet reside simultaneously inside you. But make no mistake about it- there is a wonderful feeling of exhilaration when you go about the process of analyzing how to reinvent yourself. There’s something exciting about the concept of doing work you would absolutely love to do.
Reinvention and rejuvenation. People do it all the time.
To my friends going through this rough patch- remember you are not your jobs. The value you bring to life, family and friends is in your character, not your title. Be strong, stay positive, think creatively, hustle and conquer. You can do this.
They’re called the National Bureau of Economic Research and somewhere along the line they got anointed the official declarers of when the American economy has entered into and exited recessions. You’ll be happy to know they are reporting the recession ended in June of last year.
Particularly sensitive to their suspicions the larger American public would issue one concerted and unified sarcastic laugh at their technical analysis, the NBER has taken pains to point out that recovery has been very slow. They add unemployment, currently at 9.7%, is always a lagging indicator.
And I will take pains to point out, that generally, the NBER is a lagging analytical organization. They usually make their declarations about a year after the fact. These academic economists are now concerned we’re headed for a double-dip recession, which considering how long they lag, we could be in it right now.
So what does all this mean for the 25+ million Americans who are out of work? This figure includes the additional 8% or so who have given up looking for work, don’t get counted in jobless statistics but are still unemployed. It means nothing. Much like the “official” jobless figures mean nothing by understating the real number of people out of work. That very month the recession “officially” ended, June of 2009, the Bureau of Labor Statistics reported that 550,000 Americans lost their jobs.
See, the NBER doesn’t really look at the jobless figures to determine the end of the recession. They base their analysis on the GDP, the Gross Domestic Product. This is the sum of all economic activity within the nation’s borders. There are three basic formulas for calculating GDP and one of them, for example, looks like this:
GDP= C+ Inv+ G+ (eX-i)
“C” stands for private consumption (what we spend on stuff). “Inv” stands for gross investments (what we spend not expecting an immediate return, like a company buying new machines to make widgets cheaper). “G” stands for government spending. “(eX-i)” is exports minus imports, a way of ferreting out what we made within our borders and what arrived here from outside our borders.
So there you go. In June of 2009, the formula said we got into positive territory and the economy stopped contracting.
With all due respect to economic analysts and the academic community that makes its livelihood debating these theoretical points, here’s another formula:
GDP we’ve explained. RJN is Real Jobless Numbers from which we subtract the OJF, the monthly Official Jobless Figures. NBER is the 8 academic economists whose work made headlines today. BS is a universally acknowledged acronym that means exactly what you think it does.
An economic analyst for JP Morgan Bank by the name of Michael Feroli, has released an analysis that concludes that unemployment benefits are causing more and longer unemployment.
JP Morgan Bank is the actual inventor of the “credit derivative.” Through its own greed, incompetence and arrogance, this particular institution played a significant role in creating the credit crisis that helped send America into its worst recession in 70 years. For them to imply that eliminating jobless benefits would be good for the country- is beyond the pale. Oh, but there’s so much more that is outrageous- about this theory, how it was reached, about what it implies.
Go ahead, Michael Feroli, please share your great economic wisdom with us:
Jobless benefits have the potential to increase the unemployment rate through two channels. First, by softening the blow of losing a job, they allow unemployed persons to become more selective in what job offer they accept, thereby raising the average duration of unemployment and increasing the unemployment rate.
Oh, yes, the economy is creating so many employment opportunities that people are in a position to be “selective?” What planet is this wanker living on? There are several hundred, in some cases, several thousand, applicants per job opening. JP Morgan’s resident economic genius apparently thinks it’s the other way around and that there are hundreds of job offers for every unemployed person.
Let’s now go to the other leg of his hypothesis:
Second, they [jobless benefits] may encourage people who would otherwise drop out of the labor force to be counted as jobseekers and therefore in the labor force.
In his breathlessly illogical construct, Mr. Feroli is saying that because in order to receive jobless bennies you have to show you are looking for work, you are counted as a member of the job force and that makes the nation’s official unemployment rate higher. Note to Feroli: If you drop out of the labor force you are still jobless. It’s just that you’re now considered a “discouraged” worker and are no longer counted in the official unemployment statistic. But you are still without income and banks, like the institution you work for, are still foreclosing on your home.
So on one hand he says jobless benefits cause people to be “selective” and not take jobs, yet, by looking for work at all, they are contributing to a higher unemployment rate. There is no way to win with this guy.
Damien Hoffman, at Wall St. Cheat Sheet, pokes great big, gigantic holes in Feroli’s twisted theory. The biggest one being- if you made $1,000 a week when you were employed, how is making $400 a week in jobless benefits any kind of incentive to not find work?
There are many macro forces which have caused one of the worst recessions this century. Therefore, I don’t buy the overly simplistic conclusion that unemployment benefit extensions are the cause of longer than average unemployment. I think the busted credit bubble played a major role.
In the entire report, there was not one mention of how much money people receive on unemployment. More importantly, there is no metric showing unemployment income compared with former income. There is also no metric showing unemployment income compared with personal/household expenses.
As of February 2009, the average weekly unemployment check in the U.S. was $293. How many people do you know who can manage on less than $300 a week? How about living in Manhattan on $405 a week? If you’ve ever visited, you know that’s a joke.
I’m not sure if Michael Feroli at JPMorgan has been at his desk for over 100 hours a week, but he needs to get out more.
Thank you, Damien Hoffman, you’re my new hero.
Do you realize how many people have been laid off by JP Morgan Bank? Since November of 2008, more than 17,000. I know many of them because I met them at a career transition service called BDM back when I was unemployed just a few short months ago.
In Feroli’s intellectual masturbation exercise, he is talking about his own laid off co-workers. Apparently, he doesn’t understand how close he’s come to being laid off himself. And, frankly, after seeing the quality of his analytical work, I would not lay him off. I would fire him for cause and he therefore would be denied unemployment benefits which should be just fine with him, because according to his theory, that would help the nation’s overall unemployment situation.
Because he would not be receiving jobless benefits, by his own conclusions, this would motivate him to try and find work faster.
Summing Up the Outrages
♦ JP Morgan Bank is paying a man to research and publish analysis about statistics that have nothing to do with real people, their real lives and the real pressures they face.
♦ He then insults those people by insinuating they’re turning down jobs because they’re happy with their big fat unemployment checks.
♦ He insinuates that without jobless benefits they would be so insecure with the prospect of destitution and homelessness that it would motivate them to get work quicker.
♦ The man getting paid to write this drivel, works for the very banking institution that helped cause the recession by inventing the “credit derivative;” that would be the one that would foreclose on the homes of the jobless and put them on the streets.
How do you sleep at night, Michael Feroli?
I just read that Katie Couric makes $300 thousand dollars….a week. That’s over $14 million a year. As CBS News has just reportedly laid off some 100 employees, there seems to be a revolt brewing at the Tiffany network.
From Matt Drudge this morning:
…her salary is now in the direct line of fire, network insiders explain, and a populist backlash against Couric’s cash is said to be forming inside the newsroom.
“She makes enough to pay 200 news reporters $75,000 a year!” demands a veteran producer. “It’s complete insanity.”
The angry source continues: “We report with great enthusiasm how much bankers are making, how it is out of step with reality during a recession. Well, look at Katie!”
Actually, look at the ratings for total viewers for the week of January 25th:
NBC ABC CBS
10,080,000 8,510,000 6,760,000
Somebody’s not getting their money’s worth. I don’t necessarily begrudge large anchor salaries; there’s a lot of pressure riding on their shoulders. But it seems to me the age of the 800-pound gorilla news anchor is so over. As the advertising model for traditional media becomes increasingly obsolete and as the erosion of viewers continues for the Big Three network newscasts, this kind of spending for the big-cahoona anchors has got to be seriously reevaluated.
I have never been a Katie Couric-basher. I happen to think the CBS Evening News, especially under Rick Kaplan’s producing stewardship, is pretty damned good. But I feel the pain of those 100 laid-off CBS News employees. And the pain of the ten people that just got laid off at CNNRadio in Atlanta. And the pain of the 20 of us that got blown out at ABC News Radio late last year.
According to Unity-Journalists of Color, the umbrella group for the nation’s minority journalist organizations, between January of 2008 and September of 2009- over 46,000 jobs have been lost in the news business.
This is a really tough time for everybody and really brutal for folks in the traditional news business; Radio, TV, Newspapers. The source quoted on Drudge this morning has it right. Seems like a bit of a disconnect that those who bitch about corporate bonuses and banker’s salaries in the midst of a recession are themselves commuting in limos and earning $300 thousand weekly paychecks.
Most news people, of course, don’t make anywhere near that kind of money. Try half of Katie’s weekly paycheck, over an entire year. But even at an annual $150K, by Couric salary standards, you still get the equivalent of 100 news correspondents. The disparity takes your breath away.