June 2009 Archives

Tue Jun 9 02:49:59 CDT 2009

Doom-related news: Unemp. Report, More Future Mortgage woes, 1991 Federal Law change.

Unemployment Rate now 9.4%

"The number of employed persons incrased by 787,000 to 14.5 million in May". The same report notes that long-term (> 27 weeks) increased by 268,000 (in May) to 3.9 million. So 26.9% of the unemployed have been unemployed for at least at least half a year. That scares me.

2.2 million people are "marginally attached to the labor force" and 9.1 million people were part-time employed because they couldn't find anything better. If i'm correct in computing (14.5 m / .094) the estimated potential labor force is 154.3 million, then that's another 7.3 % (11.3 million) of less-than-ideally employed, for a grand total of 16.7%. Meaning about one in every 6 people is unemployed, "sub-employed," or has just given up.

Most of the news papers seemed to be trying to portray this as not entirely bad news, like the Washington Post "Jobless Rate Rises, but Pace of Losses Slows".

More Mortgage meltdown?

This report from T2 partners lays out the case there there will be two more large waves of mortgage defaults, like the one we saw early 2007. The report is long: 75 slides. There's a blog entry that attempts to highlight some parts, but i think it misses a lot. If you skim the graphs and hit the text-only conclusion slides, there's some very doomy stuff there. In the ast few slides, they seem to think (some) stocks are a good alternative to investing in real estate. Perhaps they're just hoping to drum up business by scaring people away from the real estate market. Or maybe not.

The Fed

This WP article explains how changes in laws by the U.S. Congress (requested by Wall Street in 1991) enabled the Federal Reserve to "save" Bear Stearns, AIG, BofA, etc. They requested it after the 1987 financial crisis. The Fed was previously authorized to do this during the Great Depression, but that power was revoked in 1958, until it was restore in 1987. According to Wikipedia, the Federeal Reserve is not purely a U.S. governmental agency. Like a lot of other agencies, it's independent of the federal executive departments. Instead, it reports to Congress, but it's "governed" by its own commission.

Posted by johan | Permanent link