Friday, February 4, 2011

No new jobs but unemployment is down, say what?

You've probably heard about the "screwy" government numbers on unemployment. The corporate media response is that "people have given up looking for work" and that drove down the unemployment rate. The truth is that both numbers, the disappointing 36,000 jobs created and the drop to 9% unemployment are created by surveys and are not hard numbers.

The jobs created number is determined by sampling employers to see if they are hiring or laying off. The problem with that number is that there is no way to predict which employers are going to create jobs. New employers aren't even polled of course. So when a recovery starts you always see a lag in the numbers as the new jobs are created asymmetrically throughout the workforce until things shake out.

The unemployment percentage is determined by surveying households and in theory shouldn't be affected by sampling bias if is the survey is big enough. The only problem that I see is that they may not be reaching people that have gone off grid like the homeless. This survey also estimates how many jobs were created and they say there were 600,000 new jobs in January. That would be great if true.

I wouldn't be surprised to see "robust" job growth. Jobs are not the real problem, unemployment is only a symptom of the disease. The patient may rally briefly but is still terminal.

Tuesday, February 1, 2011

The good news is that China is no longer our biggest creditor...

Oil prices fell back slightly today after Egypt’s President announced that he intends to retire making it a real possibility that Egypt and its oil pipeline will make a peaceful transition to a new government. Egypt is a choke point for 30% of the oil going to the US and is even more critical for Europe as they refine a tremendous amount of oil as well.

Meanwhile the King of Jordan fired his entire government in an attempt to quell unrest over skyrocketing food prices. The food crisis is only going to get worse across the developing world as most of the countries that provide cheap labor for transnational corporations have been importing a large percentage of their food. Even in countries that have adequate supplies or even export food the sudden jump in prices creates unrest as food consumes half the income of the majority of the population even at normal prices.

In the US, the Dow closed above 12,000 for the first time in almost three years, this happened supposedly on good economic news. In Europe however they are concerned with USD inflation as the Federal Reserve continues to pump money into the system. The Fed has now passed China to become our largest creditor as they continue buy Treasury bonds on the open market and now hold 1.1 trillion compared to China at 896 B and Japan at 877 B.

The Fed is not even halfway through its QE2 buying spree and when it is scheduled to end in June they will have holdings comparable to China and Japan combined. I’m not sure China still holds that much in Treasuries as they have been quietly selling for some time and aren’t all that transparent in their dealings. In case you’re wondering where the Fed gets all that money, they go through complicated accounting gymnastics to pretend they don’t just print it.

So you see why some people are worried about inflation. On the other hand the numbers for “sticky” inflation continue to trend lower suggesting a real danger of deflation. “Sticky” is a fancy economists’ term to refer to prices on things that don’t change easily which should give a better indication of what is really going on with the economy.

Even without including real estate, which is pretty much falling through the floor, the trend for “sticky” prices is still bad. That’s not to say so called volatile prices (you know those things you need to live like food and fuel) aren’t going to sky rocket at least on the short to medium term, almost certainly they will. But the point of the “sticky” trend isn’t about prices but that the economy isn’t doing well, in case you hadn‘t noticed.

So despite reports that manufacturing is way up (I’m not sure those are real numbers anyway) and recovering sales in automobiles and such, I wouldn’t start humming “Happy Days are Here Again” as you go out looking for a job. Even if we started creating jobs in a big way (by normal standards), the hole Bush put us in will take a decade to climb out of as we aren‘t even holding even with population growth.

Oh and in case you were wondering, income inequality between the haves and have mores in the US and the rest of the population is much worse than it is in Egypt. Of course we started out at a much higher level of average wealth and have a long ways to go to have as many people in desperate poverty as in Egypt but that is the trend and it’s accelerating. We are already back to the 1920s in inequality and heading rapidly toward the times of Charles Dickens and beyond. Next stop feudal Russia.

Monday, January 31, 2011

Today's weather report

Over the next three days the US will be treated to what is predicted to be the worst winter storm ever in this country. The cost for coping with the snowfall,  ice storms and the damage it causes will be billions. A quarter inch of ice can cause power line and other infrastructure damage that takes weeks to repair. This storm is predicted to blanket a huge area with up to two inches of ice.

The right-wingers know this is just random chance or god's wrath on the queers and democrats or just about anything but global warming. After all it's cold out isn't it? These geniuses can't grasp that winter storms are driven by heat the same as summer storms.

Speaking of summer storms, F5 tornadoes are appearing further and further north and in greater numbers. This succession winter storms have been described as winter hurricanes, well guess what's coming in the summer.

Of course with drastically shifting global weather patterns, there is no predicting what kind of weather we will have in any given year. Weather in general could be unusually mild for years and then we could get weather systems that would require creating new designations, like F6 tornadoes or Category 6 hurricanes. But it's really just god out after the queers.