Appenzell
Switzerland
A Daily Compendium
of Free-Market Thinking
The Daily Bell Newswire - It's FREE!    


News & Analysis

Jobless claims indicate economy remains weak

Friday, July 10, 2009 - by Staff Report


Getty Images

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.

Post Feedback

We look forward to hearing your feedback and will respond to you as promptly as possible. Unless you specifically request otherwise, we reserve the right to publish your comments on the Daily Bell website. Please note, harassment, vulgarity and personal attacks are not welcomed.






View Feedback

Posted by Janice Dorn, m.d., ph.d. on 7/10/2009 2:04:08 AM

Another great article from The Daily Bell.

Certainly the Chinese lungs are heating up!

Local government officials in China have been ordered to smoke nearly a quarter of a million packs of cigarettes in a move to boost the local economy during the global financial crisis.

http://tinyurl.com/dy259p


Reply from the Daily Bell:

Incredible.

Posted by Erick Tippett on 7/10/2009 2:57:24 AM

I have long suspected that China or any other nation with a central banking system is due for some kind of 'karmic' reckoning. The more profound the illusion the greater the fall to a reality wake up call.

It amazes me how the same patterns repeat in history century after century. China is much older than the United States and has had these cycles with paper currency before and in fact during one of their historical cycles wrote off paper money altogether!

It seems more and more that the comment of George Santyana becomes more a truism "people who don't learn from their history are doomed to repeat it!"


Reply from the Daily Bell:

Good points.

Posted by KY Leong on 7/13/2009 12:26:54 AM

Imitation stock market, pseudo banks, pseudo free economy, pseudo boom...unfortunately, it won't be a pseudo BUST! The eventual (inevitable) correction will make the Asian crisis of 97/98 look like a bubble bath.


Reply from the Daily Bell:

Likely, it really will end up like that, unfortunately.

Posted by Dave Kress on 7/13/2009 8:38:59 AM

China's monetary expansion just adds more global fuel to the fire for gold to continue to rise. They are just diversyfing outside of their own inflating currency and do not have as much financial product (and scams) to choose from like Americans do so gold is more convenient for them.


Reply from the Daily Bell:

Good point.

Post Feedback

We look forward to hearing your feedback and will respond to you as promptly as possible. Unless you specifically request otherwise, we reserve the right to publish your comments on the Daily Bell website. Please note, harassment, vulgarity and personal attacks are not welcomed.








[Most Recent Quotes from www.kitco.com]

News & Analysis
02/08/10 Sarah Palin & the Desperation of the Elites
02/08/10 Mystery Brit Funds Pump Global Warming
02/05/10 EU on the Brink?
02/05/10 Terror for Domestic Repression
02/04/10 Germany Steals Swiss Tax Data?
02/04/10 Questioning Wakefield Lancet-Vaccine Retraction
Guest Editorials
02/06/10 Spending Freeze Not Likely, by Dr. Ron Paul
02/06/10 Are Corporations Persons? by Dr. Tibor Machan
01/30/10 Legalize Competing Currencies, by Dr. Ron Paul

Subscribe to the
Daily Bell Newswire

It's FREE!
Timely email notification of...
  • Breaking News
  • Feature Interviews
  • Guest Editorials
  • White Papers
  • eBooks & Shorts
  • Special FREE offers
...and much much more!
Guest Interviews
02/07/10 Lord William Rees-Mogg on Sound Money, Austrian Economics and British Government Reform
01/31/10 Roger Simon on American Freedom, the Success of Pajamas Media and Blacklisting Himself
01/24/10 Dr. Mark Skousen on Honest Money, Austrian Economics and the Future of Free Markets
White Papers & eBooks
01/19/10 The Woodsman Chronicles (Part 1), by Mark Thorne
12/11/09 Swiss Perpsective: Oil vs. Gold - An Evaluation of Peak Oil Theory and Investment Perspectives on Oil vs. Gold
07/14/09 Different Worlds - Two Meditations on Good and Evil
06/23/09 Swiss Perspective: Inflation vs. Deflation - a closer look at the real causes of the current economic crisis and its engine - monetary inflation

© Copyright 2008 - 2010 Appenzeller Business Press AG. All Rights Reserved. The Daily Bell is an informative compendium of independent economic views and analysis, which is published by Appenzeller Business Press AG. The information contained in the Daily Bell is for informational purposes only, is impersonal and not tailored to the investment needs of any particular person and should not be construed as financial or investment advice. Appenzeller Business Press AG does not accept any liability or responsibility for, nor does it verify the accurateness of the information being provided in the Daily Bell. Readers of the Daily Bell or any affiliated or linked sources or sites must accept the responsibility for performing their own due diligence before acting on any of the information provided within the report regardless of the source. To unsubscribe from the Daily Bell, click here.