Even though new claims for jobless benefits fell more than expected last week, dipping below 600,000 for the first time since early January, the number of Americans seeking this safety net points to an economy that is still very weak. Layoffs are slowing, but jobs are scarce, leaving nearly 7 million Americans collecting unemployment checks and retailers looking for customers. The number of newly laid-off workers requesting unemployment insurance fell by 52,000 to a seasonally-adjusted 565,000, the Labor Department said Thursday. But the drop was mostly due to a shift in the timing of auto-related layoffs, leading many economists to discount the decline. – Baltimore Sun
Dominant Social Theme: Jobless problems continue.
Free-Market Analysis: It cannot be written too many times since the mainstream media will not really write it at all: The recovery, such as it is, has basically involved propping up a number of companies, mostly banks, that would otherwise have gone out of business. The amount of money that has been expended, if one adds in all the contributions of central banks, is probably over US$20 trillion (or more) by now for Japan, Europe, Britain and America. The monetary elite will do ANYTHING to keep fiat money balls in the air in our opinion.
The rationale for pumping out so much money is to "stabilize the financial system." The system however, does not need stabilizing. The Western marketplace needs to revert to a more open economy of the sort that caused the great industrial revolutions of 18th and 19th century. The 20th century in America anyway was marked by conversion to a service economy – which was supposed to be just as wealth-producing as an industrial economy. The idea was that third world countries would make things while America in particular would concentrate on the high-end stuff and on services. But it didn't work out that way.
This brings us back to the recovery and why it will be a jobless one. The first reason has to do with the economic system itself. Today, America, especially, has fewer jobs than it did. And there are not a great many jobs coming online. The central banking economy has destabilized the survival-infrastructure of America, and also of Europe and Japan. During boom times people and communities tend to migrate away from jobs that allow them to be relatively self-sustaining. But central banking economies are subject to wild swings and thus the new jobs are often not sustainable. The dot.com jobs proved ephemeral. More recently mortgage-driven employment proved the same.
Second, the massive stimulation from central banks was not necessarily intended to create jobs, nor was much of the government stimulus. The stimulus ended up in Western banks. If the stimulus had gone to people, or even if there has been significant tax cuts, then Western economies would be creating more jobs already. But the various stimuli went to very large corporations for the most part and the financial sector. This led to something of a recovery in the marketplace, especially various stock markets – but just because banks are healthier and stocks are going up, it doesn't necessarily follow that jobs will be generated in any great quantity. In fact, the massive amount of stimuli, propping up companies that should have gone out of business, helps retard job growth. And then there's this:
Commercial Real Estate: 'Ticking Time Bomb' ... I don't know why all the wires are leading with the quote from Rep. Carolyn Maloney, D-NY today, that "The commercial real estate time bomb is ticking." I'd venture to say it's exploding all over the place. She made the comment at a hearing she chaired of Congress' Joint Economic Committee. – CNBC
Conclusion: The next shoe is going to drop sooner or later as we've pointed out. It should dent the stock market and will probably be the justification for yet another stimulus package – and apparently there may be one upcoming. But even then the economy will not be unwound. There are trillions in derivative bets that need to be dealt with. The green shoots in all this are questionable, but not a scenario that involves continued deleveraging and eventual inflation – and maybe a good deal of inflation.
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