Posted by: Tom Keene on September 6, 2010
The Cauldron of the Home Front
How to capture the spirit of Labor Day?
Look back to David Kennedy’s Freedom from Fear which rewards on every page. Every time someone compares now to the Great Depression, I want to hit them over the head with Kennedy’s life-work.
Look forward to the great research that I’m privileged to have come across my desk (see below, and don’t ask me for so-and-so’s research as we religiously protect their copyright and value added).
Look now, and it is not a pretty picture. Yes, there is marginal green-shootedness but it is a struggle. The distinction between the 10% crew and the slowly to 8% “optimists” centers on a belief in investment. The have’s cash will be put to good, domestic, use. Here’s a few 35,000 feet snapshots.
60 Years of Employment from 60 million to 139 million
The above chart is semi-log, or logarithmic on the y-axis. What that means is a) slope-matters, and b) it shows equal percentage change. Notice how the recent falloff is way, way bigger than ANY OTHER back to the end of David Kennedy’s Freedom From Fear.
The Same Semi-Log Chart: 1979 - 2010
Note how much bigger the fall-off is compared to the three previous slowdowns. Also note, the thickness of the pain, indicated by the amount of space underneath the line in the red box. This is getting old.
Here’s Your Blue-Collar Pain: This is average hourly earnings less inflation as measured by the Cleveland Fed Series. It’s ugly. It looks better on the rightside of the chart (2009 and 2010) but that’s only because inflation has evaporated (or so they say). The decade average in this series is…under 1 percent. Note how it has rolled over in recent quarters.
Research (If It’s Labor Day It Must Be Belgium)
Ethan Harris and Team BoA Merrill go grim and lower their 2011 view to sub-2% GDP and above 10% unemployment. “The downward revision comes from weaker anticipated spending from both consumers and businesses.”
John Tumazos, he of the independent shop, writes of the BHP-Potash mating, “One benefit of a BHP Billiton purchase of Potash Corp would be a consolidation of two potential over-expanders to reduce potash expansion projects.”
Dennis Gartman of The Gartman Letter writes from the 12th hole of some golf course I cannot afford on lessons from Belgium, “If Belgium cannot get its French and Dutch speakers to agree upon government, how can Brussels/Strasbourg ‘get’ German speakers, and Spanish speakers, and French speakers and Dutch speakers and English speakers and Croat speakers and Polish speakers et al to do so?” He is correct. September is Watch Europe Month.
Spread the Word: Thanks Barry and Mark
Paul & Amity
Paul Krugman writes clearly. His Delusions of Recovery is beyond important. Its short, sharp and truly must-read in a Newtonian way. Even if you don’t agree with him, wrap your head around his calculus. Summary: The way to move the needle is initiative and innovation and Paul would suggest, more stimulus.