US unemployment and the Technicolor depression
2/22/10 Baltimore, Maryland 鈥� Worse than the Great Depression鈥�
Stocks ended Friday trading not much higher than where they began. Gold rose $3. Oil is trading over $80 a barrel this morning. And stocks in Asia are 鈥渞ecovering鈥� from the Fed鈥檚 discount rate increase of last week.
If the market wanted to crash, it would have plenty of reasons to do so. China is tightening bank lending rules. Here in the US, there is the aforementioned Fed discount rate increase. In Europe, Greece is going back to the marketplace to raise more money. And in the Mideast, today鈥檚 news tells us that many Kuwaiti could be wiped out by the latest downturn in their multi-billion dollar investment industry.
Many things could go wrong; something will.
If no panic comes it is because the market is just not ready to panic. Still, we leave our 鈥淐rash Alert鈥� flag flying鈥nd stand clear. There is just more downside to this market than upside. Markets are always discovering what things are worth. We don鈥檛 want to be holding a lot of stocks when the market discovers that they鈥檙e worth only half what we paid for them. So, the flag stays up鈥ntil prices come down.
Gradually, people are coming to two contradictory realizations. On the one hand, there really does seem to be a kind of economic renaissance going on鈥r, at least that is what you might think if you read the business and investment news. On the other hand, people are also coming to realize that we鈥檙e in a depression.
We鈥檒l leave it to the mainstream press to describe the rebound, such as it is. We鈥檒l focus on the depression.
鈥淢illions of Unemployed Face Years Without Jobs,鈥� says The New York Times.
Readers may wonder what kind of economic renaissance fails to produce jobs. Answer: a depression.
As we鈥檝e opined many times in the past, a depression is not just a time when people stand in line to get bowls of soup or sell apples on street corners. It鈥檚 a time of adjustment鈥hen mistakes of the previous boom are corrected鈥nd a new economic model is found for going forward. This doesn鈥檛 happen overnight, no matter how much federal money is put to work helping it. In fact, the government money just gets in the way鈥istorting the picture and delaying the necessary changes.
Those black-and-white depression days of the 鈥�30s are gone. Now, we have a depression in full Technicolor鈥ith plenty of shades of gray, too.
More people today get food handouts than ever got them in the 鈥�30s. We call our soup lines the Food Stamp Program. More people are out of work too鈥�.
鈥ut here you have to look carefully at the figures to understand it. In the 鈥�30s, there was no public safety net. No unemployment compensation鈥o severance packages鈥nd no government welfare. People didn鈥檛 give up looking for a job; they had no alternative. They kept looking until they found something. Either you were working鈥r you were jobless. If we reported the numbers the same way they did in the 鈥�30s鈥he number would already be up near Great Depression levels鈥t about 15% to 18% joblessness.
But there鈥檚 something else. Now, there are more people per household working. Back in the 鈥�30s, the man of the house was the one that had a job. Typically, the family relied upon him, and him alone, as the breadwinner.
And guess what? If you look at the men of the house鈥en 25-54鈥hat you see is that one out of every 5 of them is out of work.
For men鈥his is clearly a Depression鈥o, it鈥檚 worse. Not only are they unemployed. They鈥檙e going to stay unemployed for a long time. Because it takes times for a depression to do its work. And when it is over 鈥� maybe five or ten years鈥r 20 years ahead 鈥� not only won鈥檛 they find their old jobs again鈥hey may never work again. And they won鈥檛 have wives or families either.
Men鈥檚 jobs are disappearing 鈥� jobs in manufacturing and building. As the NY Times explains, they probably aren鈥檛 coming back any time soon. What鈥檚 more, studies show that the longer a person stays unemployed the harder it is to get back into the workforce. Employers don鈥檛 like to take a chance on someone who鈥檚 been out of the job market for a long time. They鈥檙e afraid they鈥檝e lost the habit of work鈥r that there鈥檚 some other reason why they have been out of work for so long.
Women鈥檚 jobs鈥n information and services鈥re doing relatively well. So, men not only lose their incomes鈥hey lose their places in the family, and in the world. What woman wants to marry a guy without a job and without income? Not many. During the Great Depression, marriage and family were almost automatic. People got married. Then, for better or for worse, they lived in families.
Even before the depression began, marriage had become optional. Women get more college degrees than men. They typically don鈥檛 like 鈥渕arrying down.鈥� They delay marriage while developing their careers鈥nd then, when they are ready to marry, it鈥檚 hard to find a suitable man.
Result? Well, we don鈥檛 know where this leads. But it doesn鈥檛 look good for the beer-swilling, football loving X chromosome half of the population.
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