The Great Recession

Employment figures clearly show that this is much more than a cyclical recession. It is the breaking of an historic credit bubble, made worse by the Fed's policy responses and recommendations on banking regulation since 1994.

If you look closely at the chart below, you will see that if you subtract the temporary government hiring for the Census, there is no recovery in employment. It is flat. With all the trillions spent so far, why is there such a weak response?

You cannot kick start something with a quick blast of stimulus if it is still broken. So any stimulus to the economy or subsidies to the banks that are being applied are essentially wasted, until the system is significantly reformed and restructured. That is the problem.

Worse than wasted really, because it robs future governments of the ability to engage in constructive action. Like a third world country, the pigmen were the first to the trucks, with the help of corrupt politicians, and are stealing the aid intended for the public and have been hoarding it.

Stimulus. Reform. What we have seen so far from the Congress, the Fed, and Wall Street is simply white collar looting, and ironically in a crisis which they created.

And when the investigations and trials come later, which they will, watch how the pigmen claim complete ignorance of any wrongdoing even in their own companies or at most a few sincere errors in judgement, just like the CEO's and bankers and the financiers have been doing already in front of the Congress and the FCIC.

Hyprocrites and liars playing the public, whom they secretly despise as their inferiors, for fools. This is the prevailing attitude in Washington, the mainstream media, and on Wall Street.



This excellent chart is from Calculated Risk.

And as an aside regarding purported sources of our troubles, an Economic Chupacabra sighting in the People's Republic...

"Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US.” China Youth Daily

ADP: Department of Records Revision

"April’s reading was revised to show a reduction of 545,000 workers, up from a previous estimate of 491,000."

Is an 11% month over month change in an employment number a revision or a rewrite?

The ADP report is supposed to be based on actual reports from private industry.

This pervasive pattern of 'good numbers' that result in stock market rallies and the massaging of public opinion, only to be replaced by downward revisions thirty days later, with little notice or quote, is cynical manipulation of the media at best, and a dangerous slide into social engineering by an increasing distortion of 'reality' at worst.

If you have not read the novel or seen the movie lately, 1984 is worth a look.


Bloomberg
ADP Estimates U.S. Companies Cut Payrolls by 532,000
By Courtney Schlisserman

June 3 (Bloomberg) -- Companies in the U.S. cut an estimated 532,000 workers from payrolls in May as the labor market showed little sign of improving even as the recession abated, a private report showed today.

The drop in the ADP Employer Services gauge was bigger than economists forecast. April’s reading was revised to show a reduction of 545,000 workers, up from a previous estimate of 491,000.

Companies from General Motors Corp. and Chrysler LLC to American Express Co. continue to cut jobs to control costs even as the economy shows signs of stabilizing. Mounting unemployment will restrain consumer spending, muting any recovery.

“Still losing over half a million jobs a month is hard to get excited about,” Derek Holt, an economist at Scotia Capital Inc. in Toronto, said in a note to clients. “Steep job losses still signal a deeply troubled economy.”

...Economists forecast the ADP report would show a decline of 525,000 jobs, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from decreases of 425,000 to 580,000.

Economists’ Forecasts

A government report on June 5 may show payrolls at companies and government agencies shrank by 520,000 in May and unemployment rose to a 25-year high of 9.2 percent, according to a Bloomberg survey of economists.

Job-cut announcements last month showed the smallest increase in more than a year, Chicago-based placement firm Challenger, Gray & Christmas Inc. also said today. Planned firings rose to 111,182, up 7.4 percent from May 2008. The rise was the smallest since firings last dropped in February 2008.

Today’s ADP report showed a reduction of 267,000 workers in goods-producing industries including manufacturers and construction companies. Employment in manufacturing dropped by 149,000. Service providers cut 265,000 workers.

Companies employing more than 499 workers shrank their workforces by 100,000 jobs. Medium-sized businesses, with 50 to 499 employees, cut 223,000 jobs and small companies decreased payrolls by 209,000.