Simplified Answer To All Economic Woes

It's Jobs Stupid.

Hey folks,

I know I was told I shouldn't say anything, but, nice try. You know who you are, and you know what I'm talking about. {Smile} Nice try. But here we are. Happy Thursday to you folks.

Now, as I said before, some of you heard me on the Tom Sullivan Radio Show on Friday talking about the Housing quote - unquote "Recovery." Tom asked what I though could be done to speed up the Housing "Recovery." Some of you did not like my answer. "Too simplistic." Well, I have news for you. It really IS just this simple. So I wanted to elaborate a bit more on this topic.

Oh, I could get on here and talk about different Economic Formulas. I could talk about inserting more Capital into the Housing Industry, and speak in Financial lingo. I could talk about statistics and show you how this and that SHOULD work in the Industry via looking at history. But this will not solve ANYTHING. It may make me "sound smart." You may be left with the feeling that this is just too complicated to understand therefore I must know what I'm talking about. But the TRUTH is really not that difficult.

Why are people not buying homes? Well, why are they NOT buying Cars. Why are they not buying a big screen TV from the local Retailer? A new Reuters/Ipsos poll showed on Tuesday 72 percent of people said they were very worried about Joblessness and 67 percent were very concerned about Government spending. With the "Official" Unemployment rate of 9.5 percent, REAL numbers in double digits, and the huge Budget Deficit, people are just not going to go out an make investments in, well, ANYTHING.

Look, the formula is really simple. No Job, or fear of losing one, no spending. No spending, no new Jobs, no new Businesses. If you do not go to Merchant A and buy item B. Merchant A makes no money. They do not hire more people. In most cases, they CUT people. I'm not going to go out and buy that Big Screen TV, if I do not know if I will be able to pay my Electric Bill next month. I'm not going to go out and buy a new Car tomorrow if I am collecting Unemployment, or am fearful I may soon be. I, sure enough, am not going to invest in a long term Mortgage.

Chances are, raise your hands, you know someone now that is unemployed. They are collecting $500 bucks from the Government in unemployment benefits. That leaves little money, even with a "Housing Incentive" tax break, or $8,000 dollars check. That eight grand is not going to cover the long term Thousand plus monthly bill.

I told this story on the show. I met this guy at a Mini-Mart. We were both getting a Coffee. He just bought a home in this new Neighborhood that was built, well, started to be built, about Four years ago. There is him, and a Neighbor a street or two over. Oh there is houses there. About eight or so. Some are not even completed. He paid 1.4 Million dollars. Now he has done pretty good for himself. He can afford it. So he bought it. But now? The house right across the street from his, a "cookie cutter high end home," that looks just like his, now on the market for $400 Grand. Same configuration. Same size. Everything. $400 Grand. His Neighbor? He said his Neighbors are on their way out. They can afford it as well, but they have already lost a Million Dollars, why continue to pay. They can afford to go somewhere else, and pay cash for a smaller home. So they are thinking about it.

Credit? Who cares? Is your Credit Score 700 or higher? GREAT! Where are you going to get a loan? WHY are you going to get a loan? No one is lending. It makes no logical sense whatsoever to go out an make an investment, when you do not know what tomorrow brings.

I know this guy. He got a job where he is, because of the Benefits, and Job Security. It was pretty much a standard belief that once you are vested in this Job, you are there for life. Well, 5 years later, half his department was cut. His Supervisor that has been there something like 15 years got demoted. There are now like two people left in front of him, before he goes in and gets a pink slip. Do you REALLY think that he is all that concerned about investing in a bigger home? A new Car? He has a family, and his Wife has a child on the way. He WAS looking into getting a larger home. He has a modest two bedroom now. Nope. He is going to work with what he has got. His car is pretty beat up. Is he worried about going out and investing in a NEW one? Nope. As long as it will go from point A to B, he will keep it.

They use to say, "It's the Economy Stupid." Well, it's Jobs Stupid. Without Jobs, and with this growing fear about losing them, we will NEVER have a recovery in Housing, the Auto Industry, or ANY Economic Recovery at all. It ALL has to start with JOBS.
Peter

Jobs Jobs, Jobs. It's The Economy, Stupid

You can not have an Economic Recovery without JOBS!

Hey folks,

That is just a simple FACT! You can not have an Economic Recovery without JOBS! This is an EXCELLENT piece at CNN Fortune - Stop the 'jobless recovery' madness!

Economy that isn't creating employment opportunities simply isn't doing its job. By Colin Barr, senior writer Last Updated: November 6, 2009: 2:18 PM ET

NEW YORK (Fortune) -- It's time to stop glorifying our economic doldrums with this "jobless recovery" nonsense.

Yes, the economy did grow in the third quarter, for the first time in a year. Fewer Americans are filing new claims for unemployment insurance,

One reason is that MOST have given up LOOKING!

and giant financial institutions appear less apt to collapse and send us into another stupor. The stock market has recovered much of its winter decline.

But so far there is no sign of an employment turnaround -- and without one, and soon, all the other gains could prove fleeting.

The U.S. has lost jobs in 22 straight months, and Friday's news that 10.2% of the labor force is out of work -- the highest reading since 1983 -- shows just how far we have to go.

Without better job prospects, the consumers whose spending makes up the lion's share of economic activity will remain tightfisted. That will slow the healing of deep wounds in the housing and financial markets.

"To have a real recovery you need to put people to work," said John Harrington, who runs Harrington Investments, a socially responsible asset management firm in Napa, Calif. "Right now we aren't doing that."

The term jobless recovery was used mostly as a pejorative when it came into circulation in the 1990s. But in the wake of last year's meltdown, it has taken on a new sense: If you give it time, economic growth will come. That has been the mantra throughout 2009.

Yet Friday's headline unemployment number was worse than economists expected,{Of course} and it wasn't the only bad news. The average workweek remains short by historical standards -- suggesting many employed people are working fewer hours than they'd like. People are staying unemployed longer and losing their benefits, in spite of recent government action to extend them.

In spite of Obama's agenda, EVERYTHING is failing. Five more banks failed this week. That makes 120 for the year. Foreclosures are at a record high, More Companies are going Bankrupt. Where of where have the Billions gone?

A short work week isn't just a sign of distress for cash-strapped workers. It also says it will be some time before employers start hiring again.

"Particularly with future uncertainty as high as it is, firms are more likely to increase the hours of underemployed workers before hiring unemployed workers," wrote Janney Montgomery Scott economist Guy LeBas in a note to clients Friday.

Because output fell so sharply following the oil shock and Lehman Brothers collapse of 2008, some pundits are banking on a sharp rebound.

But job and wage growth have been weak for a decade. Total private sector employment has dropped since the Yankees held their previous victory parade, in 2000.

That means there has been no net private sector job growth over a nine-year span where the U.S. population expanded by 11%, according to the Bureau of Labor Statistics.

Meanwhile, financial institutions remain unhealthy, with 140 banks having failed since the start of 2008. The few that seem to have avoided the worst hits, such as Goldman Sachs (GS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), have made a mint on their trading desks -- which thickens traders' wallets but doesn't do much for those seeking credit to start or expand a business.

"All that stuff just adds to the speculation and the market volatility," said Harrington. "I'd like to see them do more things that actually add to the economy."

Another sign that the pain isn't about to disappear comes from Sean Bisceglia, CEO of TalentDrive, a Chicago-based job search technology startup.

He says almost half of the companies he surveyed in August and September either had cut their hiring budget or didn't have one. Bisceglia concedes that number is a "fungible" one and says he expects that hiring will pick up when the economic outlook improves.

But companies like Bisceglia's may be a reason why it will take so much longer for job growth to return. Better, more efficient technology is replacing workers in many industries. That is one reason productivity has been rising -- and why jobs have been harder to come by.

"A lot of companies are using technology to streamline the hiring process, and that can hold down the headcount even when things get better," said Bisceglia, whose company employs 16 people and hopes to add four positions next year. "We're just trying to ride that wave."

So glad Obama has brought us back from the brink. Of course, that would be sarcasm. I repeat, You can not have an Economic Recovery without JOBS! Stop the insanity of out of control spending and oppressive taxation and LET the Economy fit itself. It WILL. A lot faster than when Government gets involved.
Peter

Sources:
CNN Fortune - Stop the 'jobless recovery' madness!