The White House told us we needed a stimulus package to stop unemployment but that doesn't seem to have happened yet (check out the chart below showing the rising unemployment rate since Obama became President). Remember Obama told us that if we didn't act quickly the whole world would implode. So the Congress passed another stimulus package for $787 Billion in February of this year. Another you say well we can forget the nearly $947 Billion we promised under that fiscally conservative former President George Bush. Okay I exaggerated a little with the $947 Billion. While we promised to payout $700 Billion for the TARP program we currently only have $294 Billion outstanding. But the line of credit is still open and when was the last time you saw the government not waste our money. I'm sure they will buy an airline or two before the end of the year. I mean we already own two mortgage companies, an insurance company and two automakers why not Exxon Mobil or Walmart next.
Right after the 2009 Stimulus package passed people asked how many jobs will be created and the White House didn't really know. So they thought about it came back with this gem. The stimulus package wouldn't really create jobs but it would "save" them.
Currently, unemployment stands at 9.8% so it doesn't look like too many jobs were saved. But at least 9.8% is better than the real unemployment number of 17%. I mean if 17% of the public was unemployed we would be in really big trouble right.
You may be asking yourself what does he mean real unemployment. How can there be a higher number than what the news told me last night or what I read in the paper this morning. What I mean by real unemployment is the U6 and no it has nothing to do with youth soccer for all you parents out there. The U6 is the Labor Department statistic which includes not just the unemployed but also discouraged workers and those working part-time because that's all they can get. http://tiny.cc/NPRU6Numbers
So here is the situation you're the typical American and your 401k was wiped out in March and while its made steady gains over the past few months its still almost 40% lower than it was just two years ago. Now you add to that if you bought or refinanced your house in the past five years your house now likely costs more than what you owe on it so you can't borrow against the equity because there is no equity. In analyzing the current housing market this is what Deutsche Bank had to say:
- $6 trillion in home equity has vanished already.
- 25 million homeowners, or 48% of all mortgages, will eventually wind up being underwater.
- "an absolute floor" of 7% (using a previous Fed study) of underwater borrowers will go on to default on their mortgages in the next three years.
- Two-thirds of Alt-A and Subprime loans and almost 90% of Option ARM loans will be underwater in 2011.
So here is my question to you. If you lost your job tomorrow or unemployment ran out would you get a part-time job at Walmart collecting carts even though you used to supervise 50 people at some mortgage company that is now out of business. If you have a family to take care of you damn well better take any job you can get. If you have to work two part time jobs to put food on the table you better man up or woman up to your responsibilities and put that pride in your back pocket.
Now here is the real kicker the 9.8% is actually much worse and so is the 17% number. Why you ask because our Labor Department spends to much time watching Peter Pan and thinks that fairy dust is real. You see the Labor Department just creates jobs with a sprinkle of pixie dust and everything looks much better in the morning. Well if you ever drank too much and woke up with a not so attractive person in the same bed with you then you know about coyote ugly (check out the movie if you're a puritan). Well ladies and gentlemen come February 5, 2010, we are all going to wake up and the picture isn't going to be pretty. Check out this recent column by John Crudele in the NY Post.
Labor Department Comes Clean about Fake Jobs
FINALLY, a confession!
I've been writing in
this column for years that the way the Labor Department calculates the number of
jobs in this country is deceptive.
In 11 of the 12 months, the
government adds massive numbers of jobs -- sometimes more than 100,000 -- that
it thinks, but can't prove, exist.
This is because the Labor Department
uses something called the birth/death model, which assumes that no matter how
bad the economy is, there are itty-bitty, newly-formed companies -- which can't be
reached by government surveyors -- that are creating jobs.
that this assumption is ridiculous -- that these companies probably don't exist.
And non-existent companies can't create jobs.
Not only is the public
fooled by this practice, but policymakers are being led astray. So the Labor
Department, essentially, lied again when it reported last Friday that only
263,000 jobs disappeared from the economy during September.
as that figure was, the more truthful number was actually worse because there
were 34,000 of these phantom birth/death jobs included in the count. Nearly 1
million of these non-existent jobs have been added to the government's count
since the beginning of 2009, mostly this past spring.