New symbol for the Obama Bear, should be this: 
Posted on 03/09/2009 2:38:13 PM PDT by An Old Man
Edited on 03/09/2009 3:15:05 PM PDT by Admin Moderator. [history]
David Rosenberg, North American Economist at Merrill Lynch is talking about a " Depression-Style Jobs Report "
We cannot rule out the loss of 1 million jobs in March
Judging by the leading indicators – 600,000+ jobless claims, Challenger layoffs up an eye-popping 158% from a year ago, the 78,000 plunge in temporary employment, the record-low workweek – suggest that we will have to endure an 800,000 employment slide when the March data roll out, and a 1 million loss cannot be ruled out. We may have to redefine yet again what a ‘new normal' is at that point. The bottom line is that a recovery in domestic economic activity is, at best, a late-2009 story, but at this stage, even that could be a fairy tale.
One in seven individuals unemployed or underemployed
Suffice it to say that the unemployment rate that is most inclusive in terms of accounting for all forms of “underemployment” such as this shift toward part-time and away from full-time work is the U-6 measure, which soared from 13.9% in January to 14.8% in February, a record high for this particular series. So, we have a situation where not only 1 in 11 homeowners with a mortgage are now either delinquent or in the foreclosure process, but we also have 1 in 7 individuals who are either unemployed or underemployed. We're not sure how to classify such a macroeconomic backdrop, but it certainly is not a garden-variety recession.
How we get any sustained inflation is totally beyond us
In addition to credit contraction, asset deflation, profit compression and employment destruction, we are also in a vicious inventory reduction phase in the manufacturing sector. If our forecast is correct, this would then suggest that the capacity utilization rate in manufacturing will make a new all-time low of 66.6% from 68% in January. The employment data also tell us that there is a very high probability that wages and salaries deflated -0.3% in February as well. How we end up getting any sustained inflation pressure, or backup in bond yields for that matter, as the economy moves further and further away from any semblance of “full employment” in either the labor or product market, is totally beyond us.
Putting the reflation-deflation debate into perspective
Yes, the Fed's balance sheet and the balance sheet of the federal government are expanding at record rates. But these reflationary efforts should be seen as a partial antidote, not a panacea, to the deflationary effects brought on from the unprecedented contraction in the largest balance sheet on the planet: The $55 trillion US household balance sheet. Based on what house prices and equity valuation have been doing this quarter, we are likely in for a total loss of household net worth approximating $7 trillion this quarter alone, which would bring the cumulative decline in consumer wealth to $20 trillion. This wealth loss exceeds the combined expansion of the Fed's and government balance sheet by a factor of ten. That should put the reflation-deflation debate into perspective.
Tent City Haunts America
The Mail Online is reporting The credit crunch tent city has returned to haunt America . Here are a few of the images. Please click on the link for more images and text.
Rich and poor: The tents and other makeshift homes have sprung up in the shadow of Sacramento's skyscrapers
Mish is on a roll today! Please click on the link for more images and text.
“Oh woe, look at the Sacramento Tent City” is a perennial, like the March-April stories about How The IRS Is Really Going After Tax Cheats This Year and the November stories about Let’s Not Forget The Homeless At Thanksgiving, and by perennial I mean I personally know that it’s been there for forty years. Which means it could have been there for sixty.
We’ve almost trippled the size of the money supply. How long does he think it will take till inflation comes back big time?
Hmmm...weren’t we just talking about this “stuff”?! It seems hard to escape lately. :-)
“We’ve almost trippled the size of the money supply. How long does he think it will take till inflation comes back big time?”
Looking at the math I’d say about 7-10 years.
I would venture a guess that whatever the number, it is increasing daily.
Mish is the deflationist. Peter Schiff is the hyper inflationist
My bet is on Mish’s deflation for now and the next two years at least
I give Peter lots of credit for predicting the storm
I’m actually beginning to feel nostalgic for the Carter years.
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It won’t create inflation until such time as that money escapes off bank balance sheets. Right now, the money has moved from the Treasury, to the Fed, to the large banks, where it sits, doing nothing but collecting interest paid by the Federal Reserve.
New symbol for the Obama Bear, should be this:
We had very little debt back then
ZERO trade deficit
Lots of industry
No house flipping
None of the devil's derivatives
Carter stunk but we were fundamentally a stronger nation even after losing the Vietnam war due to Democrat perfidy
Holy Cow! Do I have to wear a white tie in the soup line?
Thanks.
Make that a BOW TIE, Sir!!!! ;)
Between this and the prospect of a Mexican collapse; looks like a “Bladerunner” future.
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