The intellectual crowd is sipping their tea and pouring over the op-ed piece by Paul Krugman in the New York Times this morning. His article is a whiny diatribe, and among other things says "nor do investors seem unduly concerned" because U.S. government bonds are finding ready buyers even at historically low interest rates. That is a sign of fear and people simply seeking a safe haven. Who buys an asset with zero return except someone afraid all hell is going to break loose. He goes onto say "worries about the deficit are nothing more than fear-mongering" like the build up to the war in Iraq.
He cries that people that aren't worried about the deficit are being marginalized despite their case and solid backgrounds. That reads that media is ignoring the smart guys, the academics, the guys that crunch numbers. In other words, the elites aren't being heard. Krugman is one of those guys that can't understand when he and his brilliant posse aren't adored. But what really upsets these folks is the fact those clods at Fox News get more respect…and trust. Make no mistake, the main thrust of the piece is that Fox News is making people crazy and people in general are stupid.
Krugman wants us to buy into White House budget assumptions which say down the road interest payments on federal debt will be just 3.5%. In the meantime, these interest payments are going to be so high that we may have to borrow money just to service the debt. These super elite limousine liberals remind me of Thurston Howell III of Gilligan's Island. The millionaire and his wife continued life on the deserted isle as if privilege extended to survival situations. Krugman wants us all to chill and ride this out while he and his buddies relax in multimillion dollar condos and Palm Beach winter homes.
That isn't going to happen. People have come out of a deep slumber, jolted awake by their own personal issues, and they look around to find the entire country is in a mess but is using the wrong medicine to fix it. It's very interesting to note that all of the countries front and center in the news this week all have socialist governments. Those governments can't get their acts together because they promised the people a lifestyle that required no sacrifice or independent thought while the government provided all of the opportunities.
The unions aren't budging, farmers aren't budging, businesses have no say, and it's a complete mess. The them versus us movement has ushered in new governments around the world but what happens when you can't soak them anymore. We are getting the answers in Greece, Spain, Portugal, and Hungary.
As for the level of fear and loathing here in America, I think that it's beginning to shift. People no longer believe that the government is going to pull them out of this mess; instead they would like government to move out of the way. I think that people are less worried about the market in general although there is nobody as cocky as Krugman. They understand many initiatives must be nipped in the bud now in order for the nation to come out of this the way it has in the past. Investors haven't been that afraid, either. There is no doubt that investors have been iffy and anxiety has been running high, but that isn't the same as outright fear.
Yesterday the VIX Index surge as the so-called "fear gauge" reflected how quickly people head for the hills when stocks are plunging. However, a year-long look at the VIX reveals that fear has dissipated significantly since last year at this time.
The January jobs report was mixed, and that's actually good news. It could have been worse. We will delve more into the numbers for the afternoon report.
Highlights (and I use say that in the context of the overall report).
* Service jobs: +40,000 from -96,000
* Temp hiring: +52,000
* Manufacturing jobs: +11,000 from -23,000
* Manufacturing overtime: 3.5 hours, highest since September 2008
* Average workweek: 33.3 from 33.2, and highest in a year
* December's jobs revised to -150,000 from -85,000
* Construction: -75,000 from -32,000
* Unemployment rate: 9.7% from 10.0%
* 8.4 million Americans have lost jobs since recession began, revised from 7.2 million
Color on Jobs Data
By: Brian Sozzi, Research Analyst
More often than not following a major economic data release, the Wall Street Journal displays thoughts by leading economists on their website. The insights are very helpful, usually. So, I have detached myself from all things retail and earnings season related to opine on the jobs data we received this morning.
* Manufacturing jobs composition was interesting considering the ISM manufacturing data. Within the category, plastics and rubber showed strength; these are products used in the early stages of production. If the world was ending, as the market thought going into the report, one wouldn't see this type of resilience.
* I am surprised by the jobs increase in retail/trade following the holidays. While stores are preparing for a rebuilding of inventory, companies have automated many processes to the point where a meaningful number of workers are no longer required.
* ADP data wasn't that far off the mark, for a change.
* Strong rebound in economic growth, which is likely for 1H10, coupled with only modest increases in workweek/wages suggests continued strong productivity.
* That surprise jobs gain in November, reported at the time to be 4,000, was revised today to be a 64,000 gain. Unfortunately, there was a big upward revision to job losses in December to 150,000 from a loss of 85,000.
* For each month in 2009, except for November, non-farm payroll data was revised to show greater job loss than previously reported.