Well, the much-awaited unemployment report came out on Friday. The pundits, analysts, and kibitzers were all waiting. Their mouths open. Their pulses racing. They expected an “I told you so” moment.
Bloomberg polled them a week or two ago. The 2000 of them surveyed were overwhelmingly bullish…with the average forecast of a 27% increase for the stock market in 2010.
They must have thought the job figures would show that the ‘recovery’ was firmly underway…with unemployment finally turning down in a big way. Then it would be clear sailing…
It turned out that 95% of the new jobs were census takers – people paid by the government to count the people who pay the government.
It also turned out that people are waiting longer than ever to find a job…an average of 34 months compared to only 16 months in 2007.
Investors’ mouths turned down. They sold stocks so they could go home for the weekend without worrying. The Dow dropped 323 points.
The shorthand interpretation? It’s a Great Correction…not a recovery.
The census takers illustrate our point. Government spending – including government jobs – do not really make us richer. They make us poorer. If you could make people better off by hiring them to count each other, why not count them twice? Or three times?
The trouble is, no matter how often you do it…or how well you do it…counting people doesn’t add to our wealth; it takes away from it. Because it diverts resources – human labor – from worthwhile activities to activities that are a waste of time. And the more people you hire, the bigger the waste…and the poorer you get.
Why count people anyway? So you can apportion seats in the House of Representatives? We got a census form in the mail. It looked official…and very nosey. As far as we’re concerned, it’s none of their damned business!
But wait a minute. What if the government hired people to do useful things – such as baking and pole dancing? Well, as Jefferson put it, if you expect the government to do your baking for you, you “will soon want bread.”
As for the pole dancing, we don’t know…
But there’s no secret to what makes people wealthier. No magic. No miracles. No free lunches.
People want to believe that the feds can pull off some trick…that they can turn this Great Correction around by stimulating this or regulating that. Or how about tarring and feathering the BP chairman? Or sacrificing a few of Goldman’s young virgins? What? There are no virgins at Goldman? Well, how about some old sluts from JPMorgan?
JPMorgan just got fined $50 million – the largest penalty ever handed out by a UK regulator. What was its crime? “Failing to protect billions of dollars of client money by keeping it in segregated accounts,” says The Financial Times.
How much did clients lose as a result of JPMorgan’s faithlessness?
Not a penny. But they could have lost big-time, said the FSA. And besides, the regulators are getting tough everywhere.
Back in the USA, BP faces criminal charges. We don’t know exactly what its crime was either…but with so many laws on the books, it’s hard to imagine the giant oil company didn’t break a few of them.
Not that we’re shedding any tears for the goo pumper. If they can’t keep the oil in their pipes, they should get out of the oil business. But it’s a tough business. And accidents are bound to happen.
Destroying the oceans and endangering life on planet earth could be called a mistake. But destroying the economy is malicious mischief. Which is what the feds are doing.
So, Friday, the news was let out that the jobs stimulus effort was a flop. And as it made its way from one Bloomberg terminal to the others…the traders sold!
‘Risk off’…the traders call it. It means that they are selling their ‘risky’ investment positions and putting the money into safe positions – notably, US treasury bonds. The dollar rose on the news – and is now near a 4-year high.
Other news headlines tell us that the Great Correction continues. Electricity use fell for the second year in a row…the first time this has happened since 1949.
And how about deflation? A report last week told us that retail discounters are having a price war. They’re battling for stingy customers by lowering prices.
We saw a little of this ourselves. It was so hot on Saturday night that we decided to go out to Home Depot to buy some fans. We got a small fan for $9…and a large fan for $14. How can they afford to make things so cheap?
We don’t know. But they need to make things cheaply, because Americans have so little money. Real organic income – the kind that actually makes people better off – is still $500 billion below pre-crisis levels.
Let’s keep it simple, dear reader. There was a huge bubble. Now there’s a huge correction. When will another boom come? When the correction is over. When will it be over? Don’t know…maybe in 2 years. Maybe in 20.
In the meantime, why complicate things?
*** And now comes word that the scourge of the Gulf will probably make its way to Atlantic beaches too. Poor Florida. It will have its western beaches sullied. And then its eastern beaches will be slimed too.
*** We spent the weekend replacing a barn roof. It was so hot in Maryland that we wondered how people survived before the invention of air-conditioning…
Well, they had electric fans. But before that…
They must have sweat a lot.
We tore off an old roof of some red composite material and replaced it with tin. We only got about a third of it done. And at around 3PM your editor was beginning to stagger. It’s hard work, scrambling around on a barn roof. Your knees and legs begin to ache after a couple of hours. And in the heat of a Maryland summer, your head aches too.
The gods were with us. Dark clouds formed to the west. Soon, we heard the rumble of thunder. A few minutes later, a bolt of lightning came down about 2 miles away. (You can figure out how far it is by counting. The flash of lightning travels at the speed of light. You see it right away. The sound of thunder takes a little longer – about a mile per second, is what we were told.)
“Dad, you better get down off that roof,” said Henry.
“Yeah… I’ve just got a couple more screws to put in. I don’t what this tin to blow off in the storm.”
A few seconds later, a blast of wind hit the barn. For a minute, we thought we would be blown off the roof.
“Dad, you’re standing up on that roof like a lightening rod. I don’t think that’s the smartest thing to do…”
Before Henry had finished his sentence, another bolt of lightning struck. Between the flash of lightning and the thunder there was no gap. No time. They both happened at the same time.
We jumped off the roof and raced to house. A few minutes later, a downpour began.
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