Tuesday, December 21, 2010

Just as I thought

I have posted fairly often about the disconnect between the cheerleaders and the rest of us. The fact that sometimes I think I am the crazy one."I"meaning, you know, a doomer.  The fact that in my small non-technical, non-economist mind I see conditions as worsening. Even Stephen Moore is now bullish on the economy going forward! So, it was with great interest and, I'm somewhat ashamed to admit, satisfaction bordering on glee that I read a post on Financial Armageddon which links to a report from The Pew Research Center for the People and the Press.

I feel somewhat vindicated in my views- at least to the extent that I apparently have a lot of company. If I am indeed wrong, then I can say that I am far from alone. Of course my view of the world doesn't come from Ms. Couric. My view comes from talking to my neighbors, a guy down the street, maybe a convenience store operator. People with and without jobs. And I live in a solidly middle class area of a small town. What I see and hear does not mesh with what I see on the tube. Nearly all express the same feelings that I have. They really don't see much improvement and don't expect much for a long time. The results of the previously mentioned Pew poll confirm that most of us are pesimisstic, at least to a degree.

I never discount the idea that I am completely and utterly wrong. I worry about it a lot in fact. Maybe I am unable to see what others can. Maybe things really are going to turn around soon. Perhaps I am wasting a lot of time growing vegetables, storing canned goods and water. I guess that's why poll results like those at least make me feel as though I am not alone.

Sunday, December 19, 2010

Expecting better than expected GDP numbers....so?

Well, it looks like GDP numbers are going to be better than expected (who woulda thunk it?) and consumer spending is approaching pre-recessionary levels. The recession is over, it's all good, the good times are here, etc. I'm ecstatic. So much so that I could just shit.

Here's the thing(s). Last time I checked, the UE was moving the wrong way (currently 9.8% or around 17% for the U-6), the long term unemployed numbers are worse than ever, and nearly 43 million folks on food stamps (SNAP) and climbing. Add to this states in perilous deficit situations and public unions that are catastrophically underfunded. Not a pretty picture, at least not to me.

Only two scenarios as I see it. Either I and most other doomers are full of crap, or the cheerleaders are looking at the wrong things. Maybe millions haven't filed for bankruptcy, lost homes, had to take government "welfare", needed food stamps, or known the despair of long term joblessness. Maybe there really aren't thousands of Americans living in tent cities or worse. Maybe we really aren't about to set a record for number of months with the UE rate above 9%- since the Great Depression of course.

Maybe all that matters is that retail spending is supposedly back nearly to 2007 levels. That is a tough stat for me to get a grip on. After all, it seems that consumer spending is increasing WHILE employment is worsening. I still believe that a lot of the job "growth" will later be identified as part-time, seasonal employment which will end after the holidays. Even if I am wrong, it appears that those of us who are not spending- for whatever reason- aren't really needed after all. Or is it that most of us are simply paying more for necessities like food and fuel?

Or is it that the "rich" are spending like crazy and skewing the numbers. Most of the "rich" that I have known over the years are rich precisely because they DON'T spend like idiots, but they do in general spend more than an average blue collar guy like me- A LOT MORE.

Whatever the reason for the return of retail spending and better GDP numbers, most doomers, myself included, feel that conditions are worsening and the middle class is dying, You can see our rationale for this belief in many blogs like Decline of the Empire and others. Many of us believe we are headed for a two class society. The elites and the rest of us. Maybe we the doomers are simply wrong. Maybe there won't be a collapse into extreme poverty. Maybe there is no such thing as Peak Oil. Maybe nothing is as bad as we think it is.

Government spending is driving GDP growth, but what will drive job growth? Another housing bubble? Doubtful. An internet revolution? Already done that. So where will all of the real, full-time, good paying jobs come from?

Thursday, December 9, 2010

According to Larry Summers if we don't preserve the current tax rates, we run the risk of a double-dip recession. Even if we technically are no longer in recession, I can guarantee that to millions of American, including me, times continue to be bad and in some respects worsening. The flip side is that if we continue them, we will add somewhere between 700 and 900 billion to the debt according to our government.

Many thinking people wonder how this could  add to our deficit. After all, tax receipts would not really decrease. The government was assuming an increase in tax receipts with no plan to decrease spending. In fact, they were likely planning for spending to increase by that same 700 to 900 billion (at a minimum). Tax cuts and spending increases basically got us here and only spending cuts coupled with tax cuts will get us out of this. But they will have to be drastic, painful cuts. Cuts that quite likely all of us will see and feel. Or we can just stumble along a little longer, the precipice fast approaching.

Wednesday, December 8, 2010

Making ends meet

While reading Charles Hugh Smith's excellent blog Of Two Minds today, a phrase jumped out at me. A simple phrase- "make ends meet". The guest poster was lamenting the differences between now and then. Then being the age of the single income household. I grew up in those days. The stay at home Mom days. Believe me, I have thought about this issue a great many times over the years, and I don't mean just recently but for most of my working (when I did) life.

My Dad worked and my Mom stayed home with the kids, not unlike millions of other families in the 50s, 60s and into the 70s. Before you say it, yes I am well aware that she worked very hard too, likely harder. I am currently home with two grandchildren and know how tough it is to raise kids and keep a house clean. Believe me! That's not my point.

My point is how did my parents do it? I have read much about this over the years. I've seen tons of charts and graphs and wonky economic explanations. Very informative but missing what I believe is the basic issue- consumption. I know wages have been stagnant for a long time and purchasing power has diminished but there is, a least in my mind, a more obvious explanation.

My Dad had a good job. Not great but good. Solidly middle white collar. We always had two cars, television, an occasional meal out, and a vacation each summer. My Mom generally got a "new" two year old car about every five years or so and my Dad drove a clunker that required  frequent repair or replacement. We had a "big" RCA color TV (content via antenna) in the living room, ate out maybe once a month, and during the summer we would take a car trip. Life was pretty OK.

During what were in retrospect my AND my wife's prime wage earning years, there was and still is a TV in every room receiving hundreds of cable channels, several computers with the requisite high speed connection, cell phones for one and all, at least two new or almost new cars, frequent meals out due to lack of time and/or energy, activities outside the home for us and the kids, and all kinds of crap purchased to entertain the kids when they weren't playing baseball or whatever. We weren't a big vacation taking family because we really couldn't afford it. Some of my friends take ski trips and annual vacations in Europe or Mexico. Good for them! The thing is we are all two income families. No way could we have all this junk and go all these places on just one income- unless our names are Steve or Bill or Warren.

We all wanted to give our kids a "better" life. Give them "more" than we had. Looking back, there wasn't a damn thing lacking in my childhood. All we have managed to do in many cases is create unreal expectations for our kids, especially given our current, ongoing economic woes. Was it worth it? Hell no!

Sunday, December 5, 2010

Saturday, December 4, 2010

....or not!

Just when the network cheerleaders began to nearly universally celebrate the strengthening of the "recovery",  fresh employment numbers snap them back to reality. Smiles turned upside down. I guess these fools really thought that all of the temporary seasonal hiring represented a trend of some sort. You know 150,000 this month, 170,000 next month and before you know it about 3,000,000 a month (give or take)...

Last night as I was  listening to the Jim Bohannon Show ( love late night am radio) I heard a guest named Dante Chinni who is  the director of the Patchwork Nation project. Though not nearly as apocalyptic as I, he nevertheless put forth the opinion that we are in fact in rather deep shit- at least from the standpoint of employment. Well worth a listen. In any event he was one of the few guests I have heard on any of these shows who not only was concerned about the overall unemployment numbers, but also the fact that the "created" jobs may not be sustainable or in fact may not pay enough to support the sort of life many had. I'm sure you may be thinking that these folks will just have to "get used to it"or "make some changes". That's obvious. What might not be as obvious is that many of these people, including yours truly, have built a life on the income that they had- and thought they would always have. They thought that if they lost a job another could be found to more or less replace what they had...with perhaps minor alterations. In many cases this was a very naive and unrealistic expectation. Believe me, I know.

True, not everyone is in denial, but it does in fact evoke odd emotions when you are constantly bombarded with "good news" when all around you seems to be just more of the same. Of course, none of the cheerleaders realize that life on 50k a year is even possible let alone what it would be like to suddenly have to manage on $9-$10 AN HOUR. My God, this is America! Just go out and be an entrepenuer and get rich. Everyone can do that.  This is America. Right. Go to hell!

Wednesday, December 1, 2010

Things are getting better...again.

Things are improving so fast I just can't stand it. The BLS keeps trotting out these amazing job gains and the Street reacts with big gains that will probably be lost (or maybe not) down the road. Not that gains in the DOW piss me off- I still have money there. The thing about the jobs report, at least as I see it, is that for I don't know how long we were told that we needed  +250,000 per month to stabilize the unemployment rate. Now we hear it's 200,000. Next we will be told that as long as we get 100,000 new jobs a month it will signal good times. Well as I said before I'm betting that a whole lot of those jobs are temp jobs for the holidays. Better than not having a job? Of course it is. The thing is, many if not most of those seasonal jobs will go away after Christmas. What will be left? Lots of retail jobs. The jobs report indicates that a large number of retail jobs were created. Good news to be sure except that many of those jobs holders will still require assistance to make ends meet. Probably a lot of jobs will be created in our ponzi financial sector for those that are qualified. Well, that takes care of upper and lower income jobs I guess. Now what about the rest of us? 

As I have said before and am sure it is apparent to anyone reading this, I am a doomer. Here's the thing. I am a skilled labor, decent income earning type of guy. At least I was until the end of last September. I've been unemployed for 2 months without really even a sniff at a job. Am I just lazy?  Not hardly. Am I any good at what I do? Damn right I am. I am excellent at what I do. Any jobs available for me? Very few that don't include leaving my family behind and working in BFE. That comes next. You might think that having specialized skills would necessarily improve your employment outlook. Maybe if you're young. What about folks like me that are north of 50 and should supervising the kind of work they have mastered rather than hoping to find an entry level job in the field they have worked in all their adult lives? For people like us, the future doesn't look quite so rosy. In fact, my future pretty much sucks.

I will be interviewing soon for a job that is some 300 miles from home. I have a good chance of being hired. What will that mean for me and my family. Well for starters, I will once again have health insurance. That is a BIG deal, especially when you are older. The pay? Similar to what I earned at my last gig. A 600 mile daily commute? Nope. Ain't gonna happen. So now, to earn a living and have health insurance, I have to earn enough to live elsewhere, while sending my family enough money to make this move make sense. Why not move? The other half of the financial equation (my wife) has a job here which can't be easily replaced there. We have a house that fits our needs, great neighbors, and a great community. Maybe I can find some other kind of job so that I can stay here? Been trying that for 2 fricken months with no success. Either over qualified or not qualified enough for a different kind of work.

So, when I hear about the drastic improvements in the labor market, I have to wonder how many people are in same leaky boat I am. Maybe millions. That's why I view these job numbers as a feel good stat intended to drive the Market up despite seeming indicators (at least to me) to the contrary. The much talked about destruction of the middle class. Coming soon to someone you know.