SouthAmerica: I was watching today on CNN the Democratic Party debate broadcasted live yesterday on ABC TV.
I did not watch the entire debate, but in the part that I did watch Senator John Edwards was talking about the US job market and the estimated figures that he saw last week saying that the US economy is going to lose 30 million jobs in the coming years.
I am not surprised by this massive loss in jobs in the US economy in the coming years and he reminded me of one of the articles I wrote a few years ago.
I did read Jeremy Rifkin’s book more than once and I also saw his presentation on this subject on a television program – His book really opened my eyes, and I learned a lot from him, I also read most of his other published books.
Quoting from my article:
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Economic War
It is very hard for any country to create good paying jobs for everyone, to build a solid middle class and in turn generate economic growth and prosperity. Each year that goes by, it becomes even harder to create new jobs in the economy.
In 1995, a book was published, "The End of Work" by Jeremy Rifkin, which described in detail the current and future trends in the job market. I recommend reading that book to anyone who wants to understand the current catastrophic job market.
I will quote the following from Jeremy Rifkin's mind-opening book. He wrote in the introduction: "Global unemployment has now reached its highest level since the great depression of the 1930's. More than 800 million human beings are now unemployed or underemployed in the world. That figure is likely to rise sharply between now and the turn of the century as millions of new entrants into the workforce find themselves without jobs, many victims of a technology revolution that is fast replacing human beings with machines in virtually every sector and industry of the global economy.
"...In the past, when new technologies have replaced workers in a given sector, new sectors have always emerged to absorb the displaced laborers. Today, all three of the traditional sectors of the economy—agriculture, manufacturing, and services—are experiencing technological displacement, forcing millions onto the unemployment rolls.
The only new sector emerging is the knowledge sector, made up of a small elite of entrepreneurs, scientists, technicians, computer programmers, professional educators and consultants. While this sector is growing, it is not expected to absorb more than a fraction of the hundreds of millions who will be eliminated in the next several decades in the wake of revolutionary advances in the information and communications sciences.
"...Now, for the first time, human labor is being systematically eliminated from the production process. ...Substituting software for employees...To begin with, more than 75 percent of the labor force in most industrial nations engage in work that is little more than simple repetitive tasks. Automated machinery, robots, and increasingly sophisticated computers can perform many if not most of these jobs. In the United States alone, that means that in the years ahead more than 90 million jobs in the labor force of 124 million are potentially vulnerable to replacement by machines. With current surveys showing that less than 5 percent of companies around the world have even begun to make the transition to the new machine culture, massive unemployment of the kind never before experienced seems all but inevitable in the coming decades.
"...A study was published in 1989 by the International Metalworkers Federation in Geneva forecasting that within thirty years (by the year 2019), as little as 2 percent of the world's current labor force will be needed to produce all the goods necessary for total demand." I want to remind you that it is 2 percent of today's world labor force and not 2 percent of the world labor force in 2019, which could have many more millions of people.
The Current Job Market
As we can see, it will become even harder for countries to create jobs in the future for their population. A job, any type of job, it is worth saving to keep most of the members of the population employed. Keeping jobs in your country has become more important than ever before.
Here is what is happening to unemployed workers in New Jersey, this is what happened to some people that I know. Two people were evicted from their homes recently. Another person was in the process of his car being repossessed. Three other people have filed for bankruptcy protection under chapter-7. And many who have used up their unemployment extensions, are now depleting any savings that they have left for their retirement. These people have no idea how they will be able to manage financially, when they get to retirement age, and all their savings are gone.
The situation is getting more and more scary by the day, since I see a drastic increase of people who are losing their jobs and are going to the Labor Department to ask for help. The quality of the people unemployed is mind boggling, since over 50 percent of today's unemployed have at least a college degree. One fellow that I met is a young man who graduated from Harvard University, and he also has an MBA from Wharton School of the University of Pennsylvania. He has been looking for a job for over a year.
For the first time in US history, over 50 percent of the people who are unemployed are very well-educated people. Does it make any difference if the unemployed people are well educated or if they are blue color workers as in the past?
You bet it does.
Well-educated people can fight back the system that has discarded them for no good reason and they can expose the weaknesses of the entire system because many of these well-educated people know where the cracks are in the wall of the dam.
In the age of the internet and of knowledge the well-educated people can fight back the system like never before with the power of the pen.
I am sure the people who runs the US government today have never grasped that simple fact, and they think that it is just business as usual.
The reality about the “American Dream”
So much hype for the American dream, but according to the Bureau of Labor Statistics out of 100 people that start working at age 25, by age 65—1 percent are wealthy, 4 percent have enough money to retire comfortably, 3 percent are still working (can't afford to quit), 63 percent depend on Social Security, friends or charity, and 29 percent are dead.
The reality is that over 90 percent of all Americans retire almost in poverty after working for 45 years.
For the people who are unemployed, the economic depression is already here. For the people who still have jobs, they know that if they lose their jobs it will be almost impossible to find a new job. The difference between past recessions and the current job slump is that the people laid-off in the past would be rehired when the economy recovered. This time around most people's jobs have gone forever.
We are in the beginning stages of a possible worldwide depression. Americans still in denial and they don’t want to recognize the reality—the best days of the American economy are long gone, and today the system is running on borrowed money. The federal government, the states, the companies and the public are all surviving on credit. How far can this situation keep going on before the house of cards collapses?
Excellent Commentary As Usual
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You continue to bring into view issues that are very important and have a very interesting perspective.
The one thing that I know with a high level of certainty is that any country that wants to advance economically in real terms has to do so through productivity.
Without increases in productivity, quality of life declines for everyone.
A simple example is that is quite obvious for the auto industry is that US workers are paid far more than Chinese workers, whereby today Chinese workers are paid about $1.00 per hour.
Now just how is it that US automakers will not want to use this Chinese labor?
Oil lifting costs in some of the Middle Eastern countries is in the 90cents to $2.00 per barrel range. Why would any major oil company want to pursue $20 lifting costs ? Thus of course any major oil company is going to take out all of the stops to get to these geographical positions.
Thus globalization is simply the legal flexibility of a company to pursue efficiency anywhere it can be found in the world.
Thus the question becomes just how can efficiency take place without globalization ?
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And the points that you make about information technologies and their impacts on the quality of human life is very interesting.
The simplest example of this is wal-mart, which is basically a warehousing concept that has removed mom and pop retailers in every community it enters.
The next phase of this is that many products that are homogenous can simply be warehoused and ordered on the internet.
Why buy at wal-mart for $50 when one could buy from a true warehouser for $42.
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Also it is information technologies that will take away human freedoms. The human element versus computer based technologies is being taxed in the form of basically taking away human freedoms. This is a very real issue. It is almost as if a human life is just a dumbed down computer subject to more errors.
Human freedoms will soon be a thing of the past. One day in the not so distant future, one will wake up and read about the basic human freedoms people used to have.
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A real question about some forms of efficiency is that although they can take place, should they ?
SouthAmerica: I could careless who you are….for all I know you can be the King of Prussia and I still don’t care who you are.
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TrueRange: “Only newbies, talking heads and politicians attribute mkt moves to the news de jour..oh the hilarity of it!”
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SouthAmerica: If you took the time to read my posting you would have figured out that I quoted the headlines and article from a newbie organization – The Associated Press.
Try reading it again here is the AP headline:
“Stocks Sink on Jobs Data; Tech Plummets”
Friday January 4, 4:23 pm ET
By Tim Paradis, AP Business Writer
The Associated Press
Stocks Finish Lower After Slower-Than-Expected Jobs Growth, Rising Unemployment
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TrueRange: “Let me give you a lesson free of charge: The mkt only moves in the direction of least resistance. The jobs number simply allowed folks like you a way to label the days down trend.”
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SouthAmerica: You must be a genius with insights like that. The folks on this forum must be impressed with you.
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TrueRange: “The man on the other side of you...if you trade at all that is.
P.S..you never answered my question. What is your agenda here? It surely is not trading related.”
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SouthAmerica: First, if you were in the other side of my trades I would have eaten you for breakfast in the last 6 years regarding the US dollar and gold. And I have been right about the direction of interest rates as well in the US market.
If you want to learn about me then you have over 2,000 postings to figure that out – all you have to do is search Elite Trader website and my screen name is SouthAmerica.
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SA,
So, you have been short DX, long ZG and short rates for the last 6 years.
Make you a deal? Display confirms with these trades going back 6 years and I will raise you 10mm or more to manage @ 2/20. I know plenty of folks that can use a guy that makes incredible macro calls and rides the entire trend. Deal?
Not blowing smoke here. I am in touch with a family office in Switzerland that has plenty of capital for you to grow into. PM me if you prefer.
Regards,
Not a macro guru.
P.S. I would think you would be way to busy enjoying the proceeds of those trades instead of posting on ET. To each his own I suppose.
SouthAmerica: The New York Times just published the enclosed article.
I don’t understand why the people from around the world still are sending so much money to be invested in the United States when the system it is run not much better than a “Banana Republic.”
The politicians in Washington can’t connect the dots even if it is necessary to save their own lives – most of them lack even a minimum amount of common sense.
You really don’t have to be a rocket scientist to figure out that it would be nice to extend the safety net when the country is in the process of getting into a major recession.
I know it is very hard to connect the dots and figure out that when you are getting into a recession the unemployment figures it will go up as more people lose their jobs as the economy starts to implode.
I also know that it is very hard to connect the dots that by giving an unemployment extension the government would be putting money in the pockets of people that might be able to pay their mortgage and keep the sub prime mess from getting in even worse shape.
Actually an unemployment extension would help people pay their bills when they don’t have another source of income; kind of help people to stay afloat.
Today, the kind of politicians we have in Washington, I don’t expect that many of them are capable of grasping what I am saying; maybe with a very few exceptions.
I also understand why a few politicians who understand what I am saying about an extension of unemployment benefits – might be persuaded to change their minds on this subject.
If the government gives an extension of unemployment benefits that would increase the number of people who are considered unemployed on the US government official statistics and the unemployment rate would go even higher because the government would not be able to classify all these people as discouraged workers.
I also understand why they don’t want to give a small increase in food stamps to the most needy group of people in US society – right now many of these people are able to secure enough food to be able to eat for about 3 weeks of the month – by keeping Americans hungry and without food for one week per month the US government is kind helping these fat Americans lose some of their extra pounds by placing them into a forced diet.
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“Tentative Deal on Economic Stimulus Plan”
By DAVID M. HERSZENHORN
Published: January 24, 2008
The New York Times
WASHINGTON — House leaders and the White House on Thursday reached a tentative agreement on an economic stimulus package of roughly $150 billion that would pay stipends of $300 to $1,200 per family and provide tax incentives for businesses to encourage spending.
A House aide close to the negotiations said that Speaker Nancy Pelosi of California and the Republican leader, Representative John A. Boehner of Ohio, reached an “agreement in principle” after Ms. Pelosi agreed not to include two proposals that had broad support among Congressional Democrats: an extension of unemployment benefits and a temporary increase in food stamps.
In exchange for those concessions, the Bush administration and House Republicans agreed that the stipend of at least $300 would be paid to all workers who earned at least $3,000 last year, even those who did not earn enough to pay taxes last year.
“The vast majority of low-income people are going to get a minimum of $300,” said a White House official familiar with the outlines of the accord.
… Republicans immediately cheered the deal as “tilted toward taxpayers” and avoiding “extraneous spending” on unemployment benefits, food stamps, or infrastructure projects, which some Democrats had said should be included in a stimulus package….
Excellent Commentary As Usual...
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What really stands out to me is that how simple this approach really is in the sense that a sum of money is agreed upon that would be significant, then tax revenue is shifted over to this category...If this money is spent at WalMart, does this not go to China ?
Perhaps of even more interest is just how sensitive the economy really is....and strongly suggests that if rates were attractive enough to save, the net result would be an assured recession.
On the other hand, it is because of the lack of savings , that the US must borrow $3 billion every day from other countries, and thus is very vulnerable.
I suspect that the US Economy will never be considered to be healed until a satisfactory number of average people save, and these people can live on the interest of a realistic savings amount.
Now when you take in consideration that the SS people thought they were saving is really not there, just where does this leave the people who are in this most vulnerable demographic.
And furthermore, even in light of all the prospective financial issues, the US is far ahead of lessor developed countries, some of which do not even have the capability of registering land titles...or delivering mail through their postal systems...
Which goes to show just how vulnerable the world is. If $1000 per family can make or break the cash flow to the strongest country in the world...then perhaps other countries would be affected if it were $50.
The world´s economics are definitely very sensitive, and very vulnerable. But one can definitely make a difference with relatively small amounts on a per family basis...
