Interesting Twist

I saw this post at Calculated Risk and it raised an interesting point I had not seen raised elsewhere or thought about myself; proper and efficient economic activity in this country and elsewhere requires people to be able to move to where the jobs are. In this way, jobs find the best people with the best ideas and the best people with the best ideas find the jobs. But when you are underwater on your mortgage and have no option available in terms of selling your house, you need to look for a job located within commuting distance. Okay, you have options in terms of renting out your home, storing your stuff, renting an apartment, etc., but you realistically have no easy options if you need to move long distance. One option may be jingle mail, which may be a reason for why it has become more prevalent, but most folks do not consider that an option. And so, rather than looking for jobs in distant locations, folks look locally. Of course when you lose your job and home, you are free to move anywhere you want. But that is not a good option either.

http://www.calculatedriskblog.com/2010/05/unemployment-geographic-mismatch.html

And another tidbit from Calculated Risk is a nice quote from the CEO of Deutsche Bank basically saying Greece is probably toast.

http://www.calculatedriskblog.com/2010/05/deutsche-bank-ceo-expresses-doubts.html

Okay, perhaps he only expressed doubts about their recovery, but I agree. The austerity measures being applied there might feel like a walk in the park for certain third world countries, but in a country of people used to living beyond their means, it is too much pain - especially when the citizenry understand that their pain is to save some pain for European banks.

Disclosures: None.

nn

Eventually They Will Huff and Puff and Blow This House Down

I have read quite a bit today from folks who have been studying the Greece rescue package for the flaws. As I watched the package announced over the weekend it seemed like watching a rerun. The process seems to be repeating itself in this recession repeatedly. (1)Bold move, (2) good market response, (3)time for considered thought and analysis, and (4) a long slow - then faster - drift back down the tubes. One and two are done, three is in process, and four will start very soon. I will not be surprised if four starts this month (if not this week) or next, my question is how soon the "then faster" part comes. The "bold" moves in Europe will provide Greece support for a while and may buy some time for the other PIIGS to get their houses of hay in order (perhaps a year or two), but you cannot paint a hay house to look like bricks and make it so. Sooner or later they will know the bricks are fake and start huffing and puffing- and that could be a matter of weeks or months, despite a package that could support Greece for a few years.

Disclosures: None.