Lilguy

On the somewhat positive jobs front, temp worker payrolls rose for the third month in a row, by 34,000, the biggest gain in two years - which may be a sign of companies dipping their toes in the hiring water while they're unsure demand will stick. (Employment highlights)

Yep. What we're seeing is the holiday sales hiring "surge." In January, it will disappear.


On Nov 06 03:58 PM DW Reid wrote:

> My guess is retailers and health care had to hire temps because of
> current demand. Unlikely a good sign into the spring however.

With $770B of the $1.4T in commercial mortgages maturing in the next five years currently underwater, FDIC revises its rules (.pdf) to allow banks to keep loans on their books as 'performing' even when the underlying properties no longer cover the outlay.

The FDIC decision makes sense. The issue is not whether or not someone is underwater, but whether they are making their payments.

Now, if they change the rules for mortgages that are NOT being paid on a current basis, whether or not they are underwater, then, Houston, we really do have a problem.

As long as Sheila Bair is heading the FDIC, I don't expect the latter to happen. NTL, her continuing (& absolutely correct) objections to the Obama administration's various financial initiatives may lead to her early (& unvoluntary) resignation. Then what????

Jobless Claims Down to 514,000; Two Things to Look for Now

Ed--

Please note that 2 MILLION more people are now receiving unemployment compensation than were doing so a year ago, and that doesn't count those who no longer qualify for these minimal, but critical, payments.

As long as we are adding more people to the roles of unemployed--compensated or not--our economy will not improve in any meaningful way.

This Recession Ain’t Over

No set of USG data seems more appropriately disputed than its employment and unemployment figures, and I thank you for pointing out new (to me) reasons for its inaccuracy.

The fact that the DOL/BLS has announced that it miscounted the labor force last year by some 824,000 points out the numerous erroneous assumptions and sloppy methodologies for counting who's working and who's been laid off or can't get into the workforce.

I'll really be interested to see how the 2010 census affects these counts. I expect the results will be even more discouraging than the results we've seen so far.

Thanks for this excellent piece.

Reversion to Disaster

I think we are already starting to see signs of the second "V"--and the growing prospects of another equity market dip--in various data, call them "rotten roots." And I suspect more will follow, including a build-up in housing market inventory and negative turn in pricing as the summer selling season ends as does the first-time buyer credit; 4Q hiring hardly stirs--much less than normal--as retailers & their suppliers fear a holiday sales season as bad as last year; banks continuing their reckless securitization practices; car sales fall post-"cash for clunkers" to new lows; industry's own Conference Board sees a drop in consumer confidence (along with employment, income, & wealth while debts remain stubbornly high); ETC.

I frankly expect all these to worsen after the holidays and the second down leg set in for at least a half year. Aside from all the economic and market angst that will create, the implications for the mid-term Congressional elections start becoming really massive. ...and then what?

Market Believes in Economic Positives, We Remain Skeptical

I appreciate the thorough and balanced data-driven assessment of the markets presented here. It's a pleasant change from some of the more opinion-driven views that appear on this blog (altho some of them are informative & even entertaining).

The Destruction of the 'American Dream'

What has made America a land of opportunity throughout most of its history is that the economic pie got larger and larger--and almost everyone gained from that growth.

But that has not always been true. As CautiousInvestor notes above, the Gilded Age was one exception when the pie got larger, but fewer gained from it. And, of course, we have had the intermittent recessions and depressions in which the pie got smaller, usually at the greater expense of the less fortunate--but the more fortunate also suffered some.

Today is different. Over the last decade--as reported in the Census report Mr. Zielenski notes above--through two recessions and a historic "boom" period, the highest 10% income households retained its its real income levels unchanged, while the median national household income has declined by 4.3% and the bottom 10% of households saw their family incomes shrink by 9%.

With the growing divergence in income (flows), one can only expect the growing concentration of wealth (stock) in the top group to continue. If the US government doesn't do something to reverse that income and wealth centralization, our economy will lose any remnants of vigor and growth it may have and, ultimately, create the conditions for total distrust of government and civil unrest.

It is not a trend that want might children and grandchildren to experience. I thought Mr. Obama might be part of the answer to that problem, but he sold out so fast to the interests of the wealthy in propping up Wall Street and the wealthy, I am not at all optimistic for our country's economic and political future.

The Coming Consequences of Banking Fraud

While there may be a grain (or two) of truth in this article, it is so full of opinion and color that it loses just about all credibility. So many words, so little substance.

I'm a lot less conspiratorial, a little more analytical (& balanced), and maybe a little more optimistic (tho not by much) than Mr. Kim.

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

Any analysis based on research from the Cato Institute--one of the most radically conservative "think tanks" in Washington--is doomed to failure at the outset.

As a retired federal employee who subsequently held positions in the private sector, I can personally tell you that the salaries and benefits of the private national defense sector are HUGELY superior to those offered federal employees--civilian and military.

More broadly, the issue of federal vs. private sector wages has been argued for decades and, with few exceptions (such as those from radically right-wing organizations), no matter how you cut it, federal employees receive much lower salaries and more-or-less comparable benefits than their private sector counterparts. The private sector offers huge advantages in salaries and bonuses especially (25-50%--higher on bonuses). The feds have some advantage in health care (continues after retirement), and pensions among the depleting ranks of Civil Service Retirement System "defined benefit" retirees (but not employees hired since 1986 under "defined contribution" Thrift Savings Plan program--a massive 401k program).

To lay our national budget deficit on the back of federal employees is inaccurate analytically and wrong morally.

Aging PCs and a fresh OS (Windows 7) will spark corporate PC sales in 2010, Intel (INTC) CEO Paul Otellini tells the FT. "The fleet of PCs is getting fairly aged; most corporate notebooks are now over four years old, desktops are over five years old, they need to refresh."

Good luck, TA! Clearly you are spending someone else's money.

I'm still at 4 years on my laptop, and plan to get 6 from it. Based on my experience in managing enterprise computing, six years may be about the physical limit of most hardware (it's seems to be a full life cycle), but I may test that. In the meantime, upgrades like those Larrysyr mentioned above, are a way to stay current technologically and remain cost-effective.

And, despite your enthusiasm for new versions of MS OS as an IT manager, few real users--even the more tech friendly ones--see much value (other than stability & security) in the newer versions of OS. None worse than VISTA. I'm hopeful that OS7 has it right, but I'm willing to wait a couple of years for people like yourself to find out if it's really better than XP.


On Sep 04 03:09 PM TA wrote:

> We have a huge glut of 5 and 6 year old machines that I am going
> to replace whether people like it or not. Either that or close the
> doors. ........
>

Aging PCs and a fresh OS (Windows 7) will spark corporate PC sales in 2010, Intel (INTC) CEO Paul Otellini tells the FT. "The fleet of PCs is getting fairly aged; most corporate notebooks are now over four years old, desktops are over five years old, they need to refresh."

There is a point at which a company (or an individual, like myself) has to refresh its IT systems & software, but I think Mr Otellini is unduly optimistic about 2010 in this regard.

I see absolutely no value in "refreshing" IT because MS has let out another dog OS--or even (miraculously!) a good OS. (VISTA was horrible--and I've never changed to it; still using XP and will until I'm confident OS7 (or 8, 9, or 10) is stable, friendly, and priced right.)

Will the systems themselves die & need replacement? Yes, eventually, but I think the corporate and consumer world are a long ways from that in a major way. In fact, this recession could be a genuine test of just how rugged our old laptops and desktops and even dumb terminals really are. I'll stick with mine until I'm certain (a) it's dead or (b) I can substantially increase my productivity with a new machine (& that's not likely to happen any time soon).

Initial Jobless Claims: 570K, down 4K from a week ago (revised) but worse than the 562K consensus. Continuing claims rose 92K to 6.234M.

Again, by comparing last week's revised number (574K) with this week's advanced number (570K), the BLS comes up with a decline in new unemployment apps.

That's apples an oranges.

Last week's advanced number was 570K, exactly the same as this week's advanced number--570K. That's apples to apples.

Having tracked these perturbations weekly this year, I can say that the average increase in the newly unemployed SA number has increased more than 3,400 per week from the "advanced" to the "revised" figure. This week's 4,000 person revision is right on track with that average.

The media effect of comparing the advanced number with last week's revised number is to show a lower increase (or greater decrease) in newly unemployed than actually occurred. The effect on markets is to be expected.

Just more spin from the BLS.

U.S. banks may be forced to continue replenishing the FDIC's insurance fund through 2013, Fox-Pitt Kelton analysts say in a note this morning. FDIC's deposit insurance fund, which protects more than $4.5T, currently faces a $45B shortfall.

"Forced"??? Screw'em!

Instead of paying an increased insurance fee, give the banks the option of dropping out of the FDIC and see how many depositors stick around. And, since they would no longer be serving the primary banking function--taking deposits & making loans--kick them out of the ranks of banks that are so thoroughly protected by the USG.

If I had my druthers, the FDIC insurance premiums would be progressive--and progressive in two dimensions: the size of overall assets (official over-inflated book value) and inversely to the ratio of deposits to assets (low ratio, high premium). So a bank with $10B in assets & $1B in deposits would pay a higher premium than a similarly sized bank with $3B in deposits or a smaller bank with a similar deposit/asset ratio.

While this would not "force" banks to move more to banking--vice securitization--activity, it would put the premium cost where the risk is.

Initial Jobless Claims: 570K, down 10K from a week ago (revised) but worse than the 565K consensus. Continuing claims fell 119K to 6.133M.

Please note that a 10,000 person change--up or down--is well within the range of error for these counts.

In fact, I have been tracking these numbers weekly since the beginning of 2008, and the revised SA initial unemployment number for each week has averaged more than 3,400 higher than the headline making initial number. (That says something about the methodology as well as the fact we're only 2/3 of the way through the year.)

My expectation is that this week's revised number, reported next week, will raise that initial unemployment number by 10,000--right back where we were last week.

Please also note that the declining continuing unemployment number does not reflect that a growing number of people are falling off the back end of unemployment compensation and, therefore, are no longer considered "unemployed." Go figure!

The Good News About Bernanke

It cudda been worse; think "Summers."

It cudda been better; think "Volcker."

The key risk is Big Ben selling out (further) to the Big Banks. Certainly we need a consumer protection agency to offset the the Fed's bias to the financial industry.