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The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

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  • The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

    The Bucking Bronco Job Market – Part I: Post-bubble recessions unemployment by industry

    “The job losses over the past three years have been across a wide range of industries and from coast to coast. And if you've lost your job, in all likelihood you will remain unemployed for longer than in any period since the Great Depression.”
    - Mark Zandi

    “A person's professional and personal identity is linked to what they do for a living. With that sense of self diminished, the unemployed person has the added stress of wondering how to make ends meet financially, especially if they have a family to support.”
    - Steve Rogers

    “Even a band of angels can turn ugly and start looting if enough angels are unemployed and hanging around the Pearly Gates convinced that all the succubi own all the liquor stores in Heaven.”
    - P. J. O'Rourke

    “What this country needs are more unemployed politicians.”
    - Edward Langley
    The U.S. job market bucked and kicked its way through two easy-credit spiked economic booms and busts. We all have friends or family members who were thrown off by the first recession in 2001 or the second that ran for two years until the end of 2009. By 2003 thousands of technology industry workers gave up hope of finding work in their trade and escaped into real estate, only to see that industry implode in 2007 the year after the housing bubble started to collapse.

    The cumulative and lasting damage caused by two consecutive, predictable and thus preventable asset bubbles is starting to dawn on their victims. Some call it the "new normal." Millions of Americans have not recovered the income or job status they enjoyed a decade ago. But thanks to trillions of dollars of government stimulus, job losses ebb and employment growth is returning to some areas, but not others, and to some industries while others continue to decline.

    Median Duration of Unemployment reached 20 weeks in Feb. 2010 and continues to rise
    Some call the period after the acute crisis, the hangover of the second bubble, a “new normal.” I call it an obviously preventable catastrophe that I and many others warned about years before it happened as the crisis developed step by step before our eyes, in detailed analysis that appeared year after year. The information was there for anyone who wanted to see and act on it.

    Over the past few weeks I received a number of calls from the media wanting to talk about the ten-year anniversary of the tech bubble. Maybe you saw Ten Years Later, The Internet Bubble Burst Still Resonates and here. But not everyone wants to hear the story told this way.

    They want me to talk about how greedy, stupid investors drove up the prices of tech stocks then houses. They don't think national television audiences are ready to hear the view that the twin bubbles were the result of bad monetary policy, of government subsidies to the politically influential finance, insurance, and real estate industries, and lack of proper regulation thereof.

    You’re not supposed to ask why bubbles don’t ever seem to happen in France or Germany or any other country on earth the way they happen here in the United States. Or if you do ask then the acceptable answer is that these booms and busts are a necessary price of economic freedom, that the uniquely creative wild west culture that leads to market excesses also produced iconic American technology giants. Google. Cisco. Microsoft. Intel. We can't have one without the other.

    The argument downplays the downside of asset bubbles, too. What did the last two bubbles really cost us, anyway? A couple hundred bankrupt dot coms, excess fiber optic cable that was later absorbed by the market, and few million foreclosed houses. So what?

    This popular argument ignores the facts. Most of the great, durable U.S. technology companies grew out of periods of stable economic growth, not during the wild booms. Housing prices are not artificially inflated in countries where the residential real estate market is not crashed up and down. Instead they correlate to the incomes of home buyers. Housing in nearly every important economy in the world costs the average family less than 25% of income rather than more than 40% here in the U.S. Over-priced housing is a major cause of uncompetitive labor costs in the U.S.

    But all of these economic distortions caused by asset bubbles pales beside the lasting damage caused to a range of key industries and labor markets. Millions are thrown out of work, or forced to accept lower paying employment, through no fault of their own. They are hapless collateral damage.

    Where bubbles fear to tread


    Bubble’s are no less interesting for their absence. In the case of France, the government subsidy of housing prices created by the mortgage interest rate deduction, the very the foundation of the U.S. housing bubble, is forbidden by that nation’s constitution. Such back-door wealth redistribution schemes, from renters to property owners, are not allowed. France’s supreme court shot down attempts by French politicians to get a housing price subsidy going through a mortgage interest rate deduction a few years ago.

    The French prefer to do their wealth redistribution up front and in full view through the structure of tax law. We prefer the covert tools of risk shifting by banking and finance. But you’ll never know this by reading the dozen articles that recently came out on the ten-year anniversary of the dot com bubble that explain it all away as an unfortunate accident caused by a ghoulish and greedy public.

    The U.S. media will never get the correct answers about the origins and nature of our past two bubbles as long as it keeps asking the wrong questions. If the causes of the bubbles are not confronted and dealt with honestly, we can never move forward. We are doomed to repetitions, or at least attempts at recreating asset bubbles, although I seriously doubt we have the credit capacity for another one: we’ve run out of suckers. Witness the difficulty of getting the asset-backed securities market going again.

    Maybe by 2016, ten years after the start of the housing bubble collapse, the quality of coverage of the topic will have improved enough that we’ll stop calling the Housing Bubble Recession the “Great Recession” as if scale not origin is the most relevant aspect of the crisis. From now on, we refuse to play along and use that misguided term.

    Just as frustrating as the discussion of post-bubble recessions as resulting from accidents and errors, the joblessness that they caused is reported in undifferentiated numbers of civilian unemployed, long-term unemployed, and rising or falling initial jobless claims, as if the United States was one big town full of like-aged workers all employed at the same job.

    The political question being dodged are these: Whose recession? Whose recovery? In which industries, states, towns, and nations? For which age and income groups?

    These are the important questions. The answers matter. Why? Because as surely as the post-bubble recessions followed from the bubbles, and as surely as post-recession re-inflation policy--consisting of more cheap credit and fiscal stimulus--followed deterministically from the recessions, the massive deficits that the stimulus created foretells austerity programs in our future. They will be necessary to calm our foreign lenders. Of course, these future austerity programs will not be directed at the group that created the mess. That is why the answer to the question, Whose recession today? is key. It is also the answer to question, Whose austerity tomorrow?

    The same folks who absorbed the blows of the post-bubble recessions since 2001. The American middle class. Read on and we will show you.

    Not one economy

    The two post-bubble recessions of the past decade had a complex impact on the U.S. labor market. They set new processes of change in motion and accelerated changes already in progress. Not all of the change is bad, but the most destructive—the rise in default and inflation risk facing U.S. government debt and the dollar—will prove by 2013 to be no easier to contain than the sub-prime mortgage crisis was in 2007. As in 2007, the warning signs are already here, but the process takes longer than you think. More on that in Part II.

    To make our case, we go state-by-state, town-by-town, industry-by-industry, and by age group to see how the bubble recessions damaged the U.S. economy.

    First we tour the national data on employment by state and by industry. After reviewing hundreds of data series a clear pattern emerged. We did not study all 3,604 local unemployment data series. That’s too large a data cornucopia even for us. We did analyze 250 and snatched a dozen from our sample that are indicative.

    Then we look at employment changes in a dozen industries to see which fared better or worse than the nation as a whole.

    We analyze the six main age groups which were disproportionately affected, if any.

    Finally we review the unemployment that America imposed on other countries when our bubble economy collapsed, comparing joblessness in the U.S. to important economic regions like the euro zone and Japan, and also smaller but no less impacted nations such as Bulgaria, Estonia, and Lithuania.

    We’ve been told for years that we’ve got it good here in the U.S. A comparison of unemployment in the United States to other countries confirms the view that they got it good and hard, too.

    We use non-seasonally adjusted data only. The graphed results are choppier than the seasonally adjusted data, but are more reliable. Most data series are from January 2000 to February 2010.

    No comments made about any borough, community, district, metropolis, precinct, township, village, state, or country is intended to disparage its good citizens. It’s bubble-infested world. We just live in it.

    Grab a cup of coffee and sit back as we reveal through 38 graphs the facts about the unemployment rate driven by bubble bust recessions compared to towns, industries, age groups, and countries.

    We begin with an update of our animated map of unemployment in the U.S. by state.

    State by state

    We forecast in October 2006 that a severe housing bust recession, worse than the 1980s recessions, was due to start in Q4 2007. It officially began in December 2007. For political reasons the post housing bust recession was not officially acknowledged until a year later, in January 2009, after the presidential elections. The housing bust recession did not earn the inaccurate label “Great Recession” until a year into the new administration. To this day it is still reported as fallout of a “financial crisis” that resulted from accidents and errors. Readers here should never forget that the Housing Bubble Recession resulted from the collapse of the housing bubble that we began to chronicle here in 2002. The economic catastrophe that followed was no more an accident than the bubble that caused it.

    The graph above animates Bureau of Labor Statistics data maps of year-over-year changes in the unemployment rate from the start of the Housing Bubble Recession in December 2007 to six months after its official end through January 2010. The recession moves through groups of states, revealing the impact of the technology and housing bubbles on economic activity and employment: the technology bubble states of California and Massachusetts; the core housing bubble states of California, Florida, and Nevada; the post-industrial states of Michigan and Illinois; the agricultural and energy states such as North Dakota, Montana, and Nebraska.

    The collapsing bubbles and recovery acts on these groups of states in a “First in, Last out” or FILO cue basis. The first states to fall into recession will be the last to come out of recession. When you hear the term “recovery” remember that North Dakota will have fully recovered a year before California starts to, and as we see below, certain industries are recovering, others will not for years, and others will never recover.

    California is the only state that belongs to both the technology and housing bubble groups. Here on iTulip we refer to California is America’s Argentina: indebted, with gigantic and unaffordable entitlement programs, a bloated public payroll, and enormous disparities of wealth, income, and debt. Unfortunately for the United States and the world, California is the eighth largest country on earth by GDP. Bigger than France. California and its housing bubble partners, including Florida and Nevada, dragged the U.S. into the Housing Bubble Recession. They in turn dragged some, but not all, countries down with it.

    States with economies that were too weak to participate in the housing bubble from 2002 to 2006, such as Michigan and Illinois, escaped the direct housing bust wave of contraction in 2007 but were paradoxically the first to be punished in early 2008 for the errors of housing bubble states.

    The agriculture and energy states were the last to go into recession, supported as they were until mid 2008 by a spike in commodity prices that investment banks made out of the weak dollar and peak cheap oil energy price trend that began in 2004.

    By comparing the unemployment rate of several key industries to the nation as a whole, the impact of the post-bubble recessions on the careers of millions comes into clear focus.

    Industry by industry

    We begin our industry analysis by comparing the unemployment rate in the services and manufacturing sectors to the rate across the United States. Workers in services industries experienced a higher unemployment rate overall before, during, and after the post-bubble recessions but manufacturing sector workers took the brunt of the economic crisis caused by the collapse of the second bubble, in housing.

    Within the goods manufacturing sector, workers employed at business that make durable goods such as autos saw the worst rise in unemployment.

    The unemployment rate in the high technology industry grew rapidly after the collapse of the tech stock bubble.

    Employment in high tech then recovered as the housing bubble took up the slack, then spiked to nearly 16% during the acute crisis in late 2008 and 2009 that similarly affected other capital-intensive industries before returning to the U.S. trend rate later in 2009. We project a steady decline in unemployment until the next recession that we project to occur around 2013 or sooner if re-inflation policies are cut short.

    The one industry that suffered more than any we looked at was the one that relied the most on housing: furniture.

    The unemployment rate hit 23% before recovering to 14% in late 2009. The rate began climbing again in the early months of 2010 as hopes of a quick recovery in housing, enabled by government lending programs, fade.

    Unemployment in Professional services trended well below the national rate for the duration of the bubble booms and bust except when it synched up briefly in 2002 and 2003 after the collapse of the tech bubble. Professional services benefited from stimulus spending in the latter part of 2009 but has been trending back up again since late 2009.

    We wondered how the recession caused by the FIRE Economy affected unemployment in the finance, insurance, and real estate industries.

    While the unemployment rate in the finance and insurance industries mirrored the national rate, it did so from a significantly lower level. The rate has continued on a jagged upward slope since mid 2008.

    The real estate industry held up surprisingly well considering the fact that it was the focal point of the Housing Bubble Recession.

    Unlike the high tech industry that saw unemployment explode after the tech bubble, paradoxically the housing bubble collapse itself kept workers in that industry busy renting previously owned property and refinancing mortgages. Someone has to administrate all of the government lending programs that were created to help the victims of Housing Bubble Recession. As a result, unemployment continues to fall in the real estate industry.

    While unemployment in the hotel industry trends above the rate in the economy overall, changes in the rate tend to track the economy and are a good proxy for the business environment generally.

    The unemployment rate in the restaurant business also tends to track the national rate but at as much as twice the rate in good times with a smaller spread in bad times.

    The Retail trade sector is as near an exact proxy for the economy overall as you can get. When we looked at the local data it was clear why: Retail trade was often the largest or second largest contributor to payroll at the town and city level.

    The wood industry serves housing and construction, and as a result saw the most extreme reversal of fortune of any industry we looked at.

    The unemployment rate in Wood products during the tech bubble boom reached a low of 1.5%, spiked to 14.4% during the recession that followed the bust, then leveled off at around 5% starting in 2004 when as the commodities boom took off along side the housing bubble. When the Housing Bubble Recession hit in 2008, unemployment shot up to 20%, fell to under 10% briefly as commodity prices recovered and stimulus programs boosted construction activity, then resumed a rise to over 21% as of February 2010. We do not expect a recovery in this sector for many years.

    The largest contributor to payroll on a town and city basis is Healthcare and social services. Not surprisingly, Healthcare was the stalwart industry of both bubble recessions.

    The healthcare industry offered refuge from both economic storms over the past decade, although the Housing Bubble Recession created unemployment even for this sector. The healthcare sub-sector of hospitals remained relatively immune. This industry nearly single-handedly kept many cities and towns from 20% plus unemployment rates as the over 65-age group continued to spend retirement savings.

    One and only one industry did better than healthcare through the post-bubble recessions; it was the only one that actually experienced falling unemployment rate during the Housing Bubble Recession.

    The unemployment rate among government employees fell from 6.1% to 3.7% during the Housing Bubble Recession.

    If you work in one of the industries pushed into recession by the tech or housing bust, you have every reason to be furious at those who allowed either one to happen. If you live in a U.S. state or town hit by foreclosures and layoffs, your anger is justified. If you live in a country that was doing well but got the rug pulled out from under you in 2008, there is one and only one reason.

    The Bucking Bronco Job Market – Part II: Post-bubble recessions unemployment by city and town $ubscription)

    (Photo Credit: Banco Popular, Puerto Rico by Eric Janszen, March 2010)

    With this industry analysis as background, we’re ready to look at unemployment at the local level. Every town and city has a dominant industry, and the causal relationship between the collapse of asset bubbles and unemployment in those industries is apparent in the data.

    We begin our local tour hopefully with Bountiful, Utah. As the name portends, Bountiful City trailed the U.S. unemployment rate by a wide margin.

    At its worst point in 2009 it barely exceeded the best rate of unemployment nationally. The 2002 economic census shows that Health care & Social assistance and Retail Trade makes up 80% of annual payroll there. As you may have guessed from that, Bountiful City is largely comprised of retirees. “Recession, what recession?” ask the people of Bountiful, Utah.

    Unemployment in Superior, Wisconsin is not superior to the national rate but closely tracked it. And no wonder, Construction and Retail Trade are the leading industries there. That explains the characteristic annual rise and fall you see in the unemployment data of states that rely on the normally cyclical construction industry. more... $ubscription

    The Bucking Bronco Job Market – Part III: Post-bubble recession unemployment by country and age group

    (Photo Credit: View from San Felipe del Morro, San Juan, Puerto Rico by Eric Janszen, March 2010)

    Next we compare U.S. unemployment rate to unemployment in several countries, starting with Europe.

    Europe has long sported a higher unemployment rate than the United States. The graph of European unemployment looks like an inverse of the 20 to 24-year old age group in the U.S. writ large. The disparity is partly statistical. In Europe, discouraged workers who have given up looking for work after six months are still counted as unemployed. The low labor mobility, that is, labor laws that increase the cost of firing off workers and other over-regulation and taxation, along with a cushy social safety net are usually cited as the main sources of the differences in rates.

    In any case, for the decade of the bubbles the U.S. could boast half the unemployment rate of the euro zone, until the Housing Bubble Recession, that is. Now the U.S. has the worst of both worlds, high unemployment and tremendously costly extensions of unemployment benefits that are costing the nation tens of billions of dollars per month.

    The U.S. bubble recessions had an inverse relationship to unemployment in the euro zone; unemployment fell in Europe as it increased after the U.S. post-tech bubble recession, picked up as the U.S. recovered during its housing bubble, and fell as unemployment in the U.S. spiked upward. This is not consistent with the story of “global recession” that has been playing on the airwaves in the U.S. for over a year. more... $ubscription

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    Last edited by FRED; 03-23-10, 04:26 PM.

  • #2
    Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

    Hi Eric
    Bloody Hell we thought FEMA had got you!

    Got some bad news, i had to shut my engineering company down, i had hope to carry on with VERY limted sales, but 16 out of 20 clients have gone bust. I NO incoming work & an emputy order book.

    I am lucky in that people such as yourself have forwarned thus forearmed me. I saved & then invested & feel that i can weather to storm......I am not owe anyone or no one owe's me anything, yes it getting shut down but no one got hurt.

    I can see clear signs of a depression everywhere now here in Liverpool, but the "main event" is yet to happen. Our local MP sez we must expect an "Event" that will cause the £ to drop by 20% overnight!

    Can't wait
    ;)
    Mike

    Comment


    • #3
      Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

      I would argue that the real estate employment picture is not as sanguine as the chart above would suggest. Many real estate professionals work on commissions. Is a broker who hasn't sold a house in a year really employed?

      Comment


      • #4
        Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

        The term New Normal does an excellent, concise job of capturing the political economy of the housing bubble-ignited crash zone we're in. Think of it in terms of the (barely) subliminal message: Get used to it, pal.

        Comment


        • #5
          Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

          Originally posted by don View Post
          The term New Normal does an excellent, concise job of capturing the political economy of the housing bubble-ignited crash zone we're in. Think of it in terms of the (barely) subliminal message: Get used to it, pal.

          or...you can read part II/III learn and prepare:

          Runtime: 5min.

          h/t TCE

          Comment


          • #6
            Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

            Maybe the giant media outlets don't ask the right questions or want to hear what really happened because they are owned and influenced by the same bunch that caused the crisis.

            Comment


            • #7
              Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

              Originally posted by Mega View Post
              Hi Eric
              Bloody Hell we thought FEMA had got you!

              Got some bad news, i had to shut my engineering company down, i had hope to carry on with VERY limted sales, but 16 out of 20 clients have gone bust. I NO incoming work & an emputy order book.

              I am lucky in that people such as yourself have forwarned thus forearmed me. I saved & then invested & feel that i can weather to storm......I am not owe anyone or no one owe's me anything, yes it getting shut down but no one got hurt.

              I can see clear signs of a depression everywhere now here in Liverpool, but the "main event" is yet to happen. Our local MP sez we must expect an "Event" that will cause the £ to drop by 20% overnight!

              Can't wait
              ;)
              Mike
              Liverpool, now that takes me back a few decades, I once had a girlfriend near there, but her Mother did not like me at all. (I had driven all the way from Southampton in an old Ford Anglia Van and wore jeans and a Icelandic Wool jumper). :eek:

              MY view of the UK is that we are at a turning point. Either we get a government that will take on board the truth of what has occurred both here in the UK as well as the US and is so well described by EJ and start to immediately take action to turn the ship around and into wind; or we will just go on sinking into the morass.

              Looking forward to the Budget next Tuesday.

              Comment


              • #8
                Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                I had a very lengthy diatribe prepared but fortunately or unfortunately, my browser crashed. So you get the short and sweet version.

                All MSM= PURE Propaganda at this point, COORDINATED (intentional or unintentional, I don't claim to know)

                Even PBS has fallen victim ever since BOA became a sponsor of The PBS News Hour.

                You and FRED strive for the rigor imposed by the econometric approach, because you want to be taken seriously and you want your forecasts to have predictive value. Well, I think you are seeing the problem with that approach right now (you even address it). GIGO ( I'm wondering out loud how many errors are errors and how many are other than errors). And it's not just one or two things either. I'm talking about the whole range of econometric statistics from inflation data to unemployment. I'm no statistician, but I'm not liking the data quality here for SEVERAL REASONS.

                The above article was a good RECAP, or midcourse update. Not really a forecast though beyond "Bad things happen by 2013 or sooner" and "We are finally starting to worry about being 70% long USTs".

                So here's my NON-econometric based forecast, based on, well, a HUNCH. (At least I think that's what they are called).

                I don't to propose know the MOTIVATION (Evil, Good, Other) for what I propose is the likely course of events and we most likely WON'T KNOW why it was done until after the "event" takes place.

                So, here goes.

                Where we ARE:

                Phase Change is a BITCH! You are right that it can take a long time, but it can also happen in an INSTANT. (I think it will be in an INSTANT and SOON! Because our Big banks our putting the EURO under speculative attack by attacking the weakest EURO member states. The structure of the EURO was designed to resist this, but the DEFENSE MECHANISM is a VASTLY HIGHER GOLD PRICE).

                Also, you say that if the FED tightens prematurely, that we are at risk of a sudden stop event. Well HELLO! What is paying interest on excessive reserves exactly? Isn't that an EXPLICIT tightening in the Production-Consumption Economy Sphere? I'll grant you that the FED is hyperinflating like a drunken sailor on steroids in the FIRE economy sphere. But in the PC Economy SPHERE, the FED is implementing policy to EXPLICITLY choke off private credit, at least that is the EFFECT it is having. And given how crafty the FED has been pumping funds to and fro from the stock market to the Treasury auction market and back again, I don't think you can say with a straight face that "They don't know what they are doing".



                amplification from
                https://economicedge.blogspot.com/20...f-century.html (you have to cut and past the address and delete the "s" in https because everytime I save it puts itulip in instead)
                THE Most Important Chart of the CENTURY

                The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009. What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail.

                It explains the "jobless" recoveries of the past and how each recent economic cycle produces higher money figures, yet lower employment. It explains why we are seeing debt driven events that circle the globe. It explains the psychological uneasiness that underpins this point in history, the elephant in the room that nobody sees or can describe.




                This is a very simple chart. It takes the change in GDP and divides it by the change in Debt. What it shows is how much productivity is gained by infusing $1 of debt into our debt backed money system.


                Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.


                Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!


                This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.


                This is the dilemma created by our top down debt backed money structure. Because all money is backed by a liability, and carries interest, it guarantees mathematically that there will be losers and that the system will eventually reach the natural limits, the ability of incomes to service debt.


                The data for the diminishing productivity of debt chart comes from the U.S. Treasury’s latest Z1 data, the complete report is posted below:


                z1








                On page two of that report is the following table showing the Growth of Non Financial Debt:




                I included Financial debt onto the end of the table, that data comes from page 14 of the Z1 report.


                This table makes clear what is happening. Business, household, and financial debt is trying to cleanse itself, to bring the level of debt back within the ability of incomes to support it. Our governments, armed with people who cannot explain the common sense behind debt saturation, are attempting to compensate by producing prolific amounts of Governmental debt.


                They feel they must do this because if they do not, then debt and money – since debt backs our money – would both decrease and that would cause the economy to slow. But by adding money, and debt, they have created a sovereign issue where our nation’s income cannot possibly service our nation’s debt. In just the month of February, for example, our nation took in $107 billion, but spent $328 billion, a $221 billion shortfall. That one month shortfall exceeds all the combined shortfalls of the entire Nixon Administration – one month.


                This is like an individual earning $5,000 but spending $15,000 a month. Would you lend your money to such an individual?


                Last year we spent just under $400 billion on interest on our current debt, plus we spend another $1.5 Trillion buying down rates via Freddie, Fannie, and Quantitative Easing. That’s $1.9 Trillion spent on interest, most of which wound up in the hands of the central banks and their surrogates. Compared to our $2.2 Trillion in income, interest expense last year nearly took it all. That means that nearly all your productive effort used to pay Federal taxes last year were transferred to the central banks.


                Modern monetary theory does not understand, nor does it correctly describe the debt backed money world in which we live. Velocity, for example, slows as debt saturation occurs. This is only common sense, and yet the formulas do not account for the bad math of debt, nor its non linear function. Velocity is blamed partially on the psychology of “consumers.” What nonsense. It is as mechanical as the engine in your car, it was designed that way. Once people, businesses, and governments become saturated with debt, new money/ debt when introduced can only be used to service prior existing debt.


                Thus money creation at the saturation point stops adding to productive efforts and becomes a roll-over affair with only the financial services industry profiting via interest and fees. In other words, money goes out and circles right back around to the banks instead of rippling through a healthy non saturated economy. If you cannot follow that most simple logic, then going to Harvard will not help you.


                Below is a chart of the Gross Federal Debt, it is now $12.6 Trillion dollars and headed straight up, a classic parabolic rise:




                Below is a chart of the Gross Federal Debt expressed in year-over-year change in billions of dollars. The same phase transition of debt saturation is clear as a bell.




                Below is a chart of Federal Net Outlays, parabolic and again headed straight up:




                Clearly this is not sustainable and that means that change to our monetary system is rapidly approaching. No, it will not be left to your children or your grandchildren. It is an immediate problem and fortunately there is an immediate solution. That solution is called “Freedom’s Vision.” It can be found at
                SwarmUSA.com.

                That chart of diminishing returns is the window to understanding why humankind is trapped in a central banker debt backed money box. No money for NASA manned space flight – NASA’s total budget a puny $18 billion in comparison to the $1.9 Trillion that went to service the bankers last year. One half the schools closing in Kansas City, states whose debts and budget deficits seem insurmountable all pale in comparison to how much money went to service the use of our own money system.


                It doesn’t have to be like that, in fact it’s a ridiculous notion that the people of the United States, or any country, should pay private individuals for the use of their money system. Ridiculous!



                Where we are going:






                The Following is from FOFOA



                Thesis


                "Inflation is a man-made scourge, made possible by the fact that most men do not understand it. It is a crime committed on so large a scale that its size is its protection: the integrating capacity of the victims’ minds breaks down before the magnitude—and the seeming complexity—of the crime, which permits it to be committed openly, in public. For centuries, inflation has been wrecking one country after another, yet men learn nothing, offer no resistance, and perish—not like animals driven to slaughter, but worse: like animals stampeding in search of a butcher.

                "If I told you that the precondition of inflation is psycho-epistemological—that inflation is hidden under the perceptual illusions created by broken conceptual links—you would not understand me. That is what I propose to explain and to prove."
                -Ayn Rand


                In Ayn Rand's
                Egalitarianism and Inflation she demonstrates the consequences of the introduction of paper money into a thriving agrarian gold-based economy. And she shows how the resulting inflation actually destroys the real-world capital that had previously been accumulated by shifting society's focus from production to consumption.

                "Now project what would happen to your community of a hundred hard-working, prosperous, forward-moving people, if one man were allowed to trade on your market, not by means of gold, but by means of paper—i.e., if he paid you, not with a material commodity, not with goods he had actually produced, but merely with a promissory note on his future production. This man takes your goods, but does not use them to support his own production; he does not produce at all—he merely consumes the goods. Then, he pays you higher prices for more goods—again in promissory notes—assuring you that he is your best customer, who expands your market.

                "Then, one day, a struggling young farmer, who suffered from a bad flood, wants to buy some grain from you, but your price has risen and you haven’t much grain to spare, so he goes bankrupt. Then, the dairy farmer, to whom he owed money, raises the price of milk to make up for the loss—and the truck farmer, who needs the milk, gives up buying the eggs he had always bought—and the poultry farmer kills some of his chickens, which he can’t afford to feed—and the dairy farmer can’t afford the higher price of alfalfa, so he cancels his order to the blacksmith—and you want to buy the new plow you have been saving for, but the blacksmith has gone bankrupt. Then all of you present the promissory notes to your “best customer,” and you discover that they were promissory notes not on his future production, but on yours—only you have nothing left to produce with. Your land is there, your structures are there, but there is no food to sustain you through the coming winter, and no stock seed to plant.

                "Would it make any difference if that community consisted of a thousand farmers? A hundred thousand? A million? The entire globe? No matter how widely you spread the blight, no matter what a variety of products and what an incalculable complexity of deals become involved, this, dear readers, is the cause, the pattern, and the outcome of inflation."

                Indeed, this is a big problem. Wouldn't you agree? Perhaps she is right, we must return to gold money if we hope to save the Western world from its ultimate destruction. Maybe this is the only way. But what if returning to an economy based only on gold and silver coins in your pocket is a complete pipe dream? What if this will never happen? Is there no hope for our future?


                Antithesis


                Let's just try a little Thought experiment. Imagine Rand's community as described above. And imagine that one entrepreneurial spirit in that community started a gold coin dealership sometime after "best customer" showed up with his paper promissory notes. Now, since we are dealing on a much smaller size scale, we will speed up our time dimension as well. So in our imagined community let us say that confidence in "best customer's" notes disappears the second time he shows up with freshly printed paper. People still accept them in trade for goods, but they don't trust them enough to hang onto them for any length of time. They would rather exchange them for gold, the old currency used before.


                So now all of a sudden our gold coin dealer's business takes off. Those market participants who are barely producing enough goods to sustain their daily existence will be spending the notes they receive on other goods right away. But eventually those notes will find their way to a super-producer, someone who is able to save some of his efforts for the future. And he will walk those notes over to our gold dealer.


                Over the course of a few days all paper notes in circulation will flow to the gold dealer, and pretty soon his supply of gold coins will run low. He may try to give the notes back to "best customer" in exchange for some more gold for his business only to find that "best customer" has no gold, only more paper notes.


                So our gold dealer's first response will be to raise the price of his remaining gold coins. And then, since gold coins are his stock in trade, he will have to venture out into the marketplace to replenish his inventory. He will have to bid gold out of the hands of the agrarian workers with more and more paper notes. And then he will have to sell those gold coins for even more than he bid for them.


                Very quickly this will raise the price of gold coins when priced in "best customer's" paper notes. And agrarian traders coming to exchange their paper for gold will realize that the cost of gold is rising. And then they will have to charge more for their goods when paid with paper.


                The end result of this little thought experiment is that on any given day the price of goods in paper notes will seem stable to the naked eye, but over time "best customer's" inflation will be absorbed into the price of gold and will not affect the savers or destroy their capital accumulation because they saved only gold.


                "Best customer" will eventually have to bring wheelbarrows full of his notes just to buy one apple. This development will expose his scam to even the most retarded villagers, and he will ultimately lose his reputation as "best customer".


                The moral of this little story is that there actually
                is hope because gold can absorb most if not all of the pain inflicted by inflation if it is allowed to do its job as a wealth reserve. It is all about how long you hang on to the paper. The longer you hold it the more you transfer the value of your own labor into the hands of "best customer".


                For Amplification please visit


                http://fofoa.blogspot.com/

                SO that's where I think this is all going (and my timeframe is end Q2 2010).

                Hey! At least it's TESTABLE ! (it happens, or it doesn't)
                Last edited by jtabeb; 03-22-10, 12:14 AM.

                Comment


                • #9
                  Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                  JT,

                  I just posted this here using tinyurl and iframe -- before I sawyour post.

                  Comment


                  • #10
                    Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                    Originally posted by jtabeb View Post
                    I had a very lengthy diatribe prepared but fortunately or unfortunately, my browser crashed.
                    If you're using Firefox, then the Lazarus Form Recovery add-on solves this problem. The right click menu on a form allows you to restore contents you typed in the last time you saw that form. It works well to recover posts lost to a browser (or any other) crash.
                    Most folks are good; a few aren't.

                    Comment


                    • #11
                      Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                      Originally posted by ThePythonicCow View Post
                      Quoted from Nathan's Economic Edge by jtabeb:
                      I don't see how this works, other than just repudiating most debt (and I suppose unfunded liabilities such as Social Security, Medicare and various Pension Funds?)

                      That's too draconian in one dimension, while not addressing other, equally serious, problems.


                      If I saw the following happening in the U.S., I might regain my optimism (a couple of these Martin Armstrong said in his latest handwritten notes):
                      • Replace various income and most other taxes with a sales tax (or "fair tax" with anti-regressive fixed reimbursement to all citizens.)
                      • Shrink the U.S. government dramatically, closing entirely several Cabinet level departments.
                      • Shrink the federal government payroll (and related contractors and providers) by half to three-quarters.
                      • Dismantle the CIA, NSA, DIA, and contracts to related "intelligence" firms (allow one new small replacement?)
                      • Unravel the Patriot Act, just passed Health Care initiative and the Department of Homeland Security.
                      • Repeal the Continuity of Government (COG) authorization; reconstitute FEMA.
                      • Repeal the substantial majority of federal laws on the books.
                      • Retract the substantial majority of federal regulations.
                      • Rewrite the remaining laws and regulations in a consistent and readable manner.
                      • Walk away from the majority of overseas military bases and all foreign wars.
                      • Downsize the military dramatically.
                      • Repeal the 16th and 17th amendments; shut down the IRS.
                      • Replace 90% or more of Representatives, Senators, and Judges.
                      • Replace the President.
                      • Return to respecting the Constitution.
                      • Exchange national, state, and local debt for "equity" (claim to some percentage of tax revenues.)
                      • Close down bankrupt banks (this includes all the biggest banks) and put remaining banks on solid financial footing.
                      • Lock up the bigcats who led this corruption.
                      • Come honest about the Big Lies of recent history, locking up the most guilty.
                      • Renewed focus on domestic production, infrastructure, energy and agriculture.
                      The easy solution to this sort of list is surely to simply repeal all legislation from a particular date. Say, 1948, (only used as an example). That will eliminate almost all the departments and those left can then be dealt with on a one by one basis. In effect, go back to the Law landscape where all the existing law at that time is still available on statute and can be resurrected immediately. Simply turn the clock back.

                      But you are still left with a massive number of people who are suddenly unemployed. That requires a detailed plan to invest new equity capital back into new jobs in each and every local community; which once again brings me back to my own thinking about The Capital Spillway Trust.

                      And before anyone says something sarcastic; you might reflect on the idea that JT may be right on the button. In which case, someone must have a plan in place for the eventuality; millions more suddenly unemployed.

                      As an aside, but very relevant, UKIP, (United Kingdom Independence Party), have just put up for discussion a very similar case for reducing the UK government expenditure by similarly drastic cuts in government.
                      http://www.ukip.org/content/ukip-pol...my-ukip-policy

                      Comment


                      • #12
                        Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                        Quoted from Nathan's Economic Edge by jtabeb:
                        That solution is called “Freedom’s Vision.” It can be found at SwarmUSA.com
                        I don't see how this works, other than just repudiating most debt (and I suppose unfunded liabilities such as Social Security, Medicare and various Pension Funds?)

                        That's too draconian in one dimension, while not addressing other, equally serious, problems.

                        If I saw the following happening in the U.S., I might regain my optimism (a couple of these Martin Armstrong said in his latest handwritten notes):
                        • Replace various income and most other taxes with a sales tax (or "fair tax" with anti-regressive fixed reimbursement to all citizens.)
                        • Shrink the U.S. government dramatically, closing entirely several Cabinet level departments.
                        • Shrink the federal government payroll (and related contractors and providers) by half to three-quarters.
                        • Dismantle the CIA, NSA, DIA, and contracts to related "intelligence" firms (allow one new small replacement?)
                        • Unravel the Patriot Act, just passed Health Care initiative and the Department of Homeland Security.
                        • Repeal the Continuity of Government (COG) authorization; reconstitute FEMA.
                        • Repeal the substantial majority of federal laws on the books.
                        • Retract the substantial majority of federal regulations.
                        • Rewrite the remaining laws and regulations in a consistent and readable manner.
                        • Walk away from the majority of overseas military bases and all foreign wars.
                        • Downsize the military dramatically.
                        • Repeal the 16th and 17th amendments; shut down the IRS.
                        • Replace 90% or more of Representatives, Senators, and Judges.
                        • Replace the President.
                        • Return to respecting the Constitution.
                        • Exchange national, state, and local debt for "equity" (claim to some percentage of tax revenues.)
                        • Close down bankrupt banks (this includes all the biggest banks) and put remaining banks on solid financial footing.
                        • Lock up the bigcats who led this corruption.
                        • Come honest about the Big Lies of recent history, locking up the most guilty.
                        • Renewed focus on domestic production, infrastructure, energy and agriculture.
                        Most folks are good; a few aren't.

                        Comment


                        • #13
                          Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                          Originally posted by ThePythonicCow View Post
                          Quoted from Nathan's Economic Edge by jtabeb:
                          I don't see how this works, other than just repudiating most debt (and I suppose unfunded liabilities such as Social Security, Medicare and various Pension Funds?)

                          That's too draconian in one dimension, while not addressing other, equally serious, problems.

                          If I saw the following happening in the U.S., I might regain my optimism (a couple of these Martin Armstrong said in his latest handwritten notes):
                          • Replace various income and most other taxes with a sales tax (or "fair tax" with anti-regressive fixed reimbursement to all citizens.)
                          • Shrink the U.S. government dramatically, closing entirely several Cabinet level departments.
                          • Shrink the federal government payroll (and related contractors and providers) by half to three-quarters.
                          • Dismantle the CIA, NSA, DIA, and contracts to related "intelligence" firms (allow one new small replacement?)
                          • Unravel the Patriot Act, just passed Health Care initiative and the Department of Homeland Security.
                          • Repeal the Continuity of Government (COG) authorization; reconstitute FEMA.
                          • Repeal the substantial majority of federal laws on the books.
                          • Retract the substantial majority of federal regulations.
                          • Rewrite the remaining laws and regulations in a consistent and readable manner.
                          • Walk away from the majority of overseas military bases and all foreign wars.
                          • Downsize the military dramatically.
                          • Repeal the 16th and 17th amendments; shut down the IRS.
                          • Replace 90% or more of Representatives, Senators, and Judges.
                          • Replace the President.
                          • Return to respecting the Constitution.
                          • Exchange national, state, and local debt for "equity" (claim to some percentage of tax revenues.)
                          • Close down bankrupt banks (this includes all the biggest banks) and put remaining banks on solid financial footing.
                          • Lock up the bigcats who led this corruption.
                          • Come honest about the Big Lies of recent history, locking up the most guilty.
                          • Renewed focus on domestic production, infrastructure, energy and agriculture.
                          Hey, I was just quoting an article that made sense, didn't follow up on much on swarm. It looked like a Green-Back USD dollar like good old Abe Lincoln ran during the us civil war.

                          Comment


                          • #14
                            Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                            Originally posted by ThePythonicCow View Post
                            Quoted from Nathan's Economic Edge by jtabeb:
                            I don't see how this works, other than just repudiating most debt (and I suppose unfunded liabilities such as Social Security, Medicare and various Pension Funds?)

                            That's too draconian in one dimension, while not addressing other, equally serious, problems.

                            If I saw the following happening in the U.S., I might regain my optimism (a couple of these Martin Armstrong said in his latest handwritten notes):
                            • Replace various income and most other taxes with a sales tax (or "fair tax" with anti-regressive fixed reimbursement to all citizens.)
                            • Shrink the U.S. government dramatically, closing entirely several Cabinet level departments.
                            • Shrink the federal government payroll (and related contractors and providers) by half to three-quarters.
                            • Dismantle the CIA, NSA, DIA, and contracts to related "intelligence" firms (allow one new small replacement?)
                            • Unravel the Patriot Act, just passed Health Care initiative and the Department of Homeland Security.
                            • Repeal the Continuity of Government (COG) authorization; reconstitute FEMA.
                            • Repeal the substantial majority of federal laws on the books.
                            • Retract the substantial majority of federal regulations.
                            • Rewrite the remaining laws and regulations in a consistent and readable manner.
                            • Walk away from the majority of overseas military bases and all foreign wars.
                            • Downsize the military dramatically.
                            • Repeal the 16th and 17th amendments; shut down the IRS.
                            • Replace 90% or more of Representatives, Senators, and Judges.
                            • Replace the President.
                            • Return to respecting the Constitution.
                            • Exchange national, state, and local debt for "equity" (claim to some percentage of tax revenues.)
                            • Close down bankrupt banks (this includes all the biggest banks) and put remaining banks on solid financial footing.
                            • Lock up the bigcats who led this corruption.
                            • Come honest about the Big Lies of recent history, locking up the most guilty.
                            • Renewed focus on domestic production, infrastructure, energy and agriculture.
                            Why do you want the 17th amendment repealed? :confused:

                            Comment


                            • #15
                              Re: The Bucking Bronco Job Market – Part I: Unemployment by industry - Eric Janszen

                              I think what he means is a repeal of the Revenue Act of 1913, and the repeal of the Federal Reserve Act

                              Comment

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