Friday, December 5, 2008

Do Not Read This Essay (To Keep Your Sanity For a Few Moments Longer)!

From Karl Denninger we read the words we had hoped were far far out in the future: Unemployment = 12.2%. Click here for the Bureau of Labor Standards chart. Click here for the shadow or alternate government statistics. (Emphasis marks and some editing were inserted - Ed.)

Read only one number out of this report (the only one you should bother with monthly) - U-6. Bottom line - 12.2%, up 1.1% since last month and 4.1% in the last 12 months, or a rise of 50%(!) This is all unemployed plus all "marginally attached" workers (those working part-time who would like a full-time job, as a percentage. This, the "non-adjusted" number, is the actual unemployment rate as reported before the BLS (government) started dicking with the numbers, and best matches unemployment as reported in, oh, the 1930's. No, this isn't a Depression print - yet. But it sure as hell is a serious recession print, and remember kids, unemployment is a lagging indicator, being 6-12 months behind the actual economic condition. That is, if and when the economy improves you will see unemployment continue to get worse for up to a year. The level of deterioration in these numbers is devastating, and given the CEO survey of the last couple of days, in which virtually everyone is expecting to lay people off (never mind the announced layoffs that haven't hit the numbers yet!) means we're going to see major further spikes upward into the New Year. (Most employers try very hard NOT to lay people off going into the holidays for obvious PR reasons. This year they're doing it anyway, which tells you everything you need to know about how bad it really is.) Everyone and their brother is out this morning saying "the government must spend our way out of this." The problem is that the government doesn't have any money; the Chinese have it exactly right when they told us (reportedly) to cut the crap and cut the debt. Of course cutting the debt means forcing the defaults that should have happened out into the open and making them happen, which means more short-term pain. But - like it or not - it is the only way out of this mess. We can either do it fast and bad, or we can keep trying to hide the truth and the pain will be both longer and more severe.
Surprise. Surprise. Not. Really. Suzan ______________________

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