Saturday, July 23, 2005

Jobs, or the Lack Thereof

According to this blog (mirroring an article at the Daily Reckoning) and this article, the official US unemployment figures are a gross distortion of the true state of affairs. What happens when this real estate bubble pops as it seems to be doing now? Where are all these people going to work next? I wonder how many of them are drawing income from property appreciation or who became RE agents. (When they lose that source of income, that will only put more downward pressure on housing sale prices.) I'm talking about the folks who majored in Art History in college because that was the easiest major, went into web design because that was what was hot then or quit their day jobs to become day traders during the dot com boom because that's where money seemed the easiest to make, and have now become real estate agents during the housing bubble because that's where the easy money is now. Where are they going to work? I guess if we want to know what the next bubble is going to be we just have to find out what their "plan B" is.

Some choice quotes:

"Every day, we get new headlines, information. But prices are short-term. They will change tomorrow. Values, on the other hand, change very, very slowly - if at all. Financial theorists say that prices are "perfect" - but they are, in fact, perfectly worthless, for they tell us nothing about what things are really worth. We have to figure that out for ourselves. Besides, prices are subject to change without notice."

"And statistics? Almost all the statistics used in economic discussion are misapprehensions, scams or lies. The GDP "growth" numbers tell us how fast the U.S. economy is growing poorer. The inflation numbers tell us only how fast prices are rising for people who don't exist - those who buy a 1990s computer today! Guess's cheaper. And the employment numbers are a swindle too, says Paul Krugman in today's International Herald Tribune. He quotes J. Bradford DeLong of UC Berkeley: "We have four of five indicators telling us that the state of the job market is not that good and only one - the unemployment rate - reading green." It reads green, rather than black, because it fails to count people who are not "actively" looking for a job. "The addition of these hypothetical participants," writes Katharine Bradbury, an economist at the Boston Fed, "would raise the unemployment rate by one to three-plus percentage points.""

"Why have so many given up looking for a job? We don't know, but we can guess: because the jobs they had hoped to find no longer exist."

""The United States is being virtually de-industrialized," writes our favorite economist, Dr. Kurt Richebächer. "The sector has lost 3 million jobs since 2000 and keep losing them month after month." America used to be a country that made things for export. It employed millions of well-paid people in factories where they made things to be sold overseas. The bars in "industrial" cities, such as Milwaukee and Baltimore, were full of working stiffs with money in their pockets. In the Highlandtown section of Baltimore, for example, near the Bethlehem Steel plant, there was a bar on practically every corner. Now, the old bars in the old working class neighborhoods are closed. The new bars, downtown, have a different clientele - office workers, real estate hustlers, and young professionals. Wine has replace beer at many of these places. Bragging about house price gains has taken over from bar fights. Wage earnings have given way to credit card and mortgage debt."

"The good-paying factory jobs are disappearing. A man can still find work - but not necessarily at the same price."

"We note in passing that the Dow has gone nowhere for a very long time. From the late '90s to today, an investor would have made nothing. But in India, stocks have more than doubled in the last three years. These are just prices, of course, not values. But people are beginning to ask questions. Not only are stocks soaring in India, wages throughout most of Asia are rising. How come people are earning more and more in Third World "basketcase" countries...while their hourly wages in America go nowhere?"


Anonymous Anonymous said...

Nice blog, Marinite. Thanks for the link.

I was just watching one of those HGTV home makeover shows the other night where a young, hip girl was renovating her loft apartment in a former sewing machine factory. And this is happening all over the US, mills and factories converted into unique housing.

While I like the idea of preserving historical sites, you can't help but realize that those former factories are so sad - once full of life and JOBS.

I live in coastal Florida but when I drive across the country I always see so many abandoned factories. I realize that some things have just replaced by technology, but most have been outsourced overseas by greedy companies and shareholders that laid off their workers to make megabucks.

There's so much more to life than money. *sigh*

Jul 23, 2005, 7:02:00 PM  
Blogger David said...

Greta blog. :-) From your fellow blogger.

Jul 24, 2005, 10:15:00 AM  

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