Underemployment is the Problem!

It was a crazy week in the market - especially in my portfolio. I was up around 20% in just two days earlier in the week only to lose most of that gain the last two days of the week. My one equity holding flucuated over 100% in a single day, i.e. from $2.01 to $1.00 a share. Just a crazy week. But the craziest thing to me is that the market rebounded from an early week sell-off. Crazy in that I see no basis for it.

Underemployment setting new highs!

I am wrong you say on the rebound in the market being crazy! Unemployment was not as bad as expected, you say! Well, as with everything, it depends on how you read the numbers. Robert Reich does not view the unemployment numbers as the least bit a green shoot. It would seem a lot of job/wage loss is being hidden in companies cutting back hours, workers forced to go part time, unpaid furloughs and the like. Workers who have jobs are working less and being paid less. It is not officially unemployment, but you can call it underemployment. It still hurts the economy.

http://robertreich.blogspot.com/2009/09/real-news-about-jobs-and-wages-ode-to.html

And as I said recently, the best place to look when unemployment numbers come out is Mish's Global Economic Trend Analysis. Mike there gives you the skinny on unemployment numbers and I highly recommend a visit. The numbers are not a green shoot. As he explains, the government likes to play with the "official" numbers with things like the birth/death model. I will not explain here as the link to Mish tells all.

http://globaleconomicanalysis.blogspot.com/2009/09/jobs-contract-20th-straight-month.html

Heck, even Bloomberg is acknowlegding that the employed are, as I have said, underemployed. The average work week is now 33.1 hours, which if you are paid by the hour means you are being paid a lot less that a 40 hour work week - unless you live in France.

http://www.bloomberg.com/apps/news?pid=20601087&sid=adK82ggZxaL8

And if you do not believe all these sources, Calculated Risk - the just the facts site - also is casting some doubts on unemployment being so rosy. Go figure.

http://www.calculatedriskblog.com/2009/09/employment-population-ratio-part-time.html

And For the Most Staggering Unemployment Figure of All!!!

Drumroll please!! As this link explains, from August 1999 to August 2009 we have lost 223,000 jobs. Now that may not seem that big a number, especially when spread over an entire decade. After all, it averages less than 2000 jobs lost a month over the past decade. No big deal - right? No big deal, that is, until you consider the fact that the nation's population has grown by over 33 million people over that decade. That folks is staggering!!

http://www.calculatedriskblog.com/2009/09/naught-for-naughts-update.html

Gettin' Stigi Widit

If you follow things financial a bit, the name Joseph Stiglitz is no stranger. He gets quoted a lot and, even though he is not always right, he seems to have a bit of a following. That is what happens to you when you win some stupid award, like the Nobel prize in economics. I like Stiglitz personally as I agree with him much more than I disagree. Then again, I have only followed him for a few years, so I may change my mind eventually. Nonetheless, I have to agree with him now. We are either going to have a W shaped recovery where we see another big dip from where we are right now, or we are going to be stuck near the bottom and bounce along for years. In other words, whether we stay where we are or go down from here, there is no long term up for a very long time. Call it the coming lost decade or as Ambrose Evans-Pritchard suggested earlier this week, the lost 25 years.

http://www.nakedcapitalism.com/2009/09/stiglitz-doubts-recovery-can-be-sustained.html

And Another One (Five) Down!

Five more banks down today. Hard to recall a couple of years back when we went a couple of years with no failures the entire year. Things certainly have changed a bit from those easy/loose credit days.

http://www.calculatedriskblog.com/2009/09/bank-failure-85-first-bank-of-kansas.html
http://www.calculatedriskblog.com/2009/09/bank-failures-86-87-inbank-oak-forest.html
http://www.calculatedriskblog.com/2009/09/bank-failure-88-community-bank-rolling.html
http://www.calculatedriskblog.com/2009/09/bank-failure-89-first-state-bank.html

I read a prediction recently that 500 banks would fail in this recession. We are still under 100, barely, but at the rate they have been falling lately we could reach the 500 mark in less than two years.

Disclosures: None.