Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

[bpr]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Another aspect of this - building community. The explosion of (false) wealth in the US over the past 30 years has, for many, destroyed any sense of community. People drive their luxury cars to their luxury homes and then sit in front of their big screen TV's, without interacting with anybody around them. Ok, perhaps that's a bit of hyperbole, but most people I talk to lament that they have no sense of that community spirit, that friends are too busy, that life has just become a treadmill.

Recapturing a sense of community would have multiple benefits. First, it would have many benefits to the individual psyche, since being a part of a community has been shown to have positive mental health benefits. But more importantly, community is how humans have survived many catastrophes in the past. A tightly knit community of people is far more resilient in the face of problems than one that is not. Now, I say, but I have not fully implemented this part, because it requires other people who also want to do that. I believe that as the situation gets more dire for more people, a sense of community will naturally grow. I see the beginnings of it around me, but they are only beginnings.

Other things one can do - plant a garden. Learn how to cook. Learn how to be frugal. Learn how to enjoy time with family and friends that don't involve expenses like restaurants or etc.

Good stuff, both to you and Ash.

This bit about community... Yesterday a co-worker told me that his son had been laid off in Oregon; we're in Pennsylvania. It struck me that during the Great Depression, people had families and communities to reply on... move in with old Aunt Maude if we lose the house, that kind of thing. Today so many families are disconnected due to the global economy that siblings are half a world apart.

You familiar with Bill McKibben's Deep Economy? Interesting stuff, sort of a blueprint.
http://www.billmckibben.com/

[ASH]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

I believe that mental preparation will be just as important as the physical preparations one makes for the interesting times ahead.

Sounds like wisdom to me.

[bart]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

U6 is already over 12% and John Williams adjustments to it for apples-to-apples comparison purposes have it as over 16% currently.

[FRED]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

EJ's statement - "My guess is that will happen no later than after unemployment surpasses 20% in 2010 but likely much sooner."

OK, could someone put some meat on this forecast? From EJ's previous post on unemployment that we would see 10 M jobs lost in 2009 I'm having trouble seeing it go past 20% in 2010. Let's assume that U3 is at 7% by end of 2008. How does EJ get to 20% in 2010?

Candidly, trying to tie treads together here is very difficult! Or is it me? ;)

Current unemployment and forecast. Source current data: Bureau of Labor Statistics. Source forecast: iTulip.com.

U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force

Current: 2.5%
2008: 3%
2009: 5%
2010: 8%

U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force

Current: 3.5%
2008: 4%
2009: 7%
2010: 10%

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)

Current: 6.5%
2008: 8%
2009: 13%
2010: 20%

U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers

Current: 7%
2008: 9%
2009: 15%
2010: 22%

U-5 Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers

Current: 7.5%
2008: 9.5%
2009: 16%
2010: 24%

U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers

Current: 12%
2008: 14%
2009: 20%
2010: 26%

See also: Housing Bubble Correction Update: Here comes the jobs crash (Part II)

[BobH]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

I'm with you on U6 or Shadow Stats but the government uses U3 ... for obvious reasons!

How does EJ get to 20% in 2010?

I 'generally feel' he is probably right. However, I would like to see some backup to support this claim!

[ASH]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Current unemployment and forecast.

Apparently, we can still be doomed without being doomers. :eek:

[rocking back and forth] "Oh, this is bad! This is very bad!"

(Not a ridicule of the forecast.)

[mcgurme]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Good stuff, both to you and Ash.

This bit about community... Yesterday a co-worker told me that his son had been laid off in Oregon; we're in Pennsylvania. It struck me that during the Great Depression, people had families and communities to reply on... move in with old Aunt Maude if we lose the house, that kind of thing. Today so many families are disconnected due to the global economy that siblings are half a world apart.

You familiar with Bill McKibben's Deep Economy? Interesting stuff, sort of a blueprint.
http://www.billmckibben.com/

That's the thing - families are far flung, which makes dealing with economic stress more difficult. I suspect many families will be forced back together, and/or people will develop non-family communities as a substitute.

Thanks for the link to that book, looks very interesting. I will put it on my reading list.

[bart]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

I'm with you on U6 or Shadow Stats but the government uses U3 ... for obvious reasons!

How does EJ get to 20% in 2010?

I 'generally feel' he is probably right. However, I would like to see some backup to support this claim!

Here's my $.02 worth along with a reverse Phillips curve reasoning. I'm slightly less bearish than EJ but the difference isn't large, and I might also change the forecast if significant other changes occur.

[BobH]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Thanks, ED

So your new forecast from past treads looks to have increased dramatically. Things like post recession peak unemployment by state have moved from 10% to over 20%. Am I reading this correctly?

Also do you see finishing 2008 at 8% nationally? That's a big move here in the last month. I understand forecasting is 'never' perfect but it would seem to impact future forecasts.

Thanks again for your responses!

[BobH]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Thanks, Bart

I'm probably hoping moe like what you have posted but I'm also servicing retail so I'm seeing much worse right now. Clearly to me unemployment should be much worse than anything we have seen over the last 50 to 60 years.

[FRED]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Thanks, ED

So your new forecast from past treads looks to have increased dramatically. Things like post recession peak unemployment by state have moved from 10% to over 20%. Am I reading this correctly?

Also do you see finishing 2008 at 8% nationally? That's a big move here in the last month. I understand forecasting is 'never' perfect but it would seem to impact future forecasts.

Thanks again for your responses!

In spite of iTulip's reputation for gloomy economic forecasts, if you look at the record you will note a pattern of over-optimism. For example, our July 13, 2008 forecast for Rhode Island peak recession unemployment in Housing Bubble Correction Update: Here comes the jobs crash (Part II) was 10%:

National Unemployment Growth Rank: 1
Macro-economic Vulnerability: High
Unemployment Growth Rate: High
Estimated Post Recession Peak Unemployment Rate: 10%
Future Home Values Rating: Poor

Here's the update as of today:

As you can see, the U-3 unemployment rate is already over 9%. This is true for all of the graphs in that report. Thus our upward national unemployment rate revisions.

[Chris Coles]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzel shrinks again - Eric Janszen

[quote=GRG55;66840]

Chris: Some days I really miss the Beeb, now that I am back on this side of the Atlantic...

What Kucinich states and the BBC reported is what EJ said some weeks ago in a post...the FED would be close to exhausting its bag of monetary tricks in 1st H 2009, and the new Administration would have to step up and keep working the problem using fiscal policy...

An amusing excerpt, quoting Jim Grant, from hedge fund manager Bill Fleckenstein's column yesterday...

...For any doubters out there, the last paragraph of the communique read: "The Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities . . . and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant." Furthermore, "the Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities."

My friend Jim Grant said that paragraph should have had the subhead: "Gold $36,000." ...

GRG, You are correct, but I was merely reinforcing the message rather than trying to say it was a new slant. But that being said, I was intrigued to hear the very clear reference to Roosevelt rather than Hoover. Made me think perhaps they will try and catch a devaluation before January is out... just a thought?

As for the Beeb; nothing beats a grand rollicking debate between a shrivelling party hack and one of the "Today" presenters on a roll. We do sometimes get some really great radio interviews here.

PS; have a great Christmas and a Happy new year..... and by then perhaps the concrete mixer and rebars will be replaced with the ground work finished and a nice walled garden to cover the whole thing... Ha! Ha!

[bpr]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

In spite of iTulip's reputation for gloomy economic forecasts, if you look at the record you will note a pattern of over-optimism.

I can feel my teeth unclench as I read the rosy prognostications.

Seriously, though, thanks.

[WDCRob]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

What is the current peak unemployment estimate now then Fred? I'm not sure I saw the upward revision (or was the 10-15% number the revision?).

[c1ue]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

On the investing front - as expected SKF is approaching the 90s again. Very tempting, I will likely take a 1/2 share VAR stab at it tomorrow morning. I can't in good conscience take a full share stab at it because my trigger is the auto bailout - and that hasn't happened yet.

Got my SKF: 2000 x 101.88

TBT is starting to look interesting, but I suspect we might see 30 before we see 40.