When will the unemployment rate hit 10%?

"The trouble with this world is that the ignorant are certain..."

George Bernard Shaw

This post was made with you in mind Flagpole. Here's hoping one day you'll be old enough to understand.

Sagarin wrote:

Indeed. And why would you make that bet when the Fed is paying you interest on your reserves,

And they are paying 1% (vs market rate of 0%), for money the government gave them.

"Here is $1trn, and we'll give u $10bn/yr to keep it at the Fed".

I'd like to tear apart the banks income statements to see what % of cash earnings comes from the Fed and other subsidies

Thank god most PMs are actually boneheads, otherwise the S&P would be at 200.

ohio_miler wrote:

Everyone in ECON 101 learns that inflation is a tax, but more specifically it is a regressive tax.

Umm...I think you need to retake Econ 101...

It's @ 100% in my house...

Mtn Dew wrote:

Has Flagpole ever admitted to being wrong? Ever?

Sure. More so than anyone here too (because I make more predictions than anyone here, and when I'm wrong, I say so). My predictions are usually spot on though. I just said Alabama would have trouble with (a now 3-4) Tennessee. Well...did any of you watch that game? And Mtn Dew, you saying Iowa will lose a game is NOT the same as me saying that Alabama will and then targeting the LSU game and whichever opponent they might face (if the beat LSU) in an SEC championship game (and saying they would have trouble with Tennessee). You're being generic. I'm being specific. ALSO, it makes a difference because Alabama fans think Alabama will run the table and win the National title (and their high ranking suggests others feel that way too). I'm just saying they won't. No one is saying that about Iowa...maybe some Iowa fans are hoping, but no experts are predicting an Iowa National title. Also, you're saying I make easy predictions that are likely to come true. Well, if that's the case then why are people arguing with me? There are at least two posters here who say I don't know what I'm talking about, so obviously for them my prediction about Alabama isn't "likely". Everyone and their brother told me how wrong I was about Ritzenhein eventually breaking the AR in the 5,000, and I was more adamant about that than anything I've ever said here. I was right. I will be right about Alabama too.

Flagpole wrote:

I just said Alabama would have trouble with (a now 3-4) Tennessee. Well...did any of you watch that game?

Obviously you didn't. You just looked at the scoreboard and the highlights of the blocked field goal and didn't do your homework. "You talk about how fragile a season is," Tide coach Nick Saban said. "You're controlling a game, even though you may say it's winning ugly. We're still ahead 12-3 and totally controlling the game with 3 minutes, 29 seconds and the ball. That's how fragile a season can be. You make one mistake and you have to go overcome it. I hope that there's a lot of lessons our team can learn from this."

Jay Cutler Sucks wrote:

Flagpole wrote:

I just said Alabama would have trouble with (a now 3-4) Tennessee. Well...did any of you watch that game?

Obviously you didn't. You just looked at the scoreboard and the highlights of the blocked field goal and didn't do your homework. "You talk about how fragile a season is," Tide coach Nick Saban said. "You're controlling a game, even though you may say it's winning ugly. We're still ahead 12-3 and totally controlling the game with 3 minutes, 29 seconds and the ball. That's how fragile a season can be. You make one mistake and you have to go overcome it. I hope that there's a lot of lessons our team can learn from this."

Ha! I DID watch that game, and while things looked pretty good for Alabama at 12-3 with 3:29 left, they were hardly dominating. I'm even more sure now than before that Alabama can't run the table and end up as National Champions...he's just basically told his team that if you're up 12-3 with 3:29 to play that you really should consider the game won. Bad message to give out. BUT, it's not the attitude of the coach that will cause Alabama to lose a pivotal game, it's that Alabama isn't the best team in the country, and in order to win the national championship, they will have to beat the best team in the country at some point, and they won't be able to do so. IF Alabama were so great, they should have steamrolled Tennessee so that some problems at the end of the game didn't threaten the outcome. Great for Alabama to have come out on top, but man, to win on a blocked field goal as time expires? Wow that's skating by. As I've said before, I would LOVE to see Alabama win the national title...much more than I'd like to see Florida win again or USC or eve Texas. Alabama has a long history recently of losing, and I root for the underdog. If they win, it also might help them land their first Heisman Trophy winner, and that would be cool. So, my reality check about Alabama isn't because I'm a hater. I just don't see them as being all that great. Tennessee just about got them. LSU is better. If Alabama can beat LSU even by a point and under any circumstance, then I'll give them some more respect. I still think that if they do that they still will have trouble in the SEC title game and then if they win that they would have trouble with any opponent (unless it's Cincinnati) in the BCS title game. But, I've been wrong before. Time will tell.

Flagpole, I'm begging you to leave the football talk and self-aggrandizing gloating for another thread. We know you were "quoting" economists back in January who had unemployment capping out at 7.6%, and now we know that 12% would not "surprise" you. We know your stance is "solid." That's your contribution to this thread and that's plenty. And for that I thank you.

As for the rest of you, but per Flagpole's comments above in regard to private business getting in bed with government, I've stated time and again that the net of culpability stretches far and wide. Castigate the private sector becaue they were "underregulated." And, yet, Fannie and Freddie (and all the other policies that promoted homeownership at all and every cost, including the tax code and the incestuous and compromised ratings cartel created by said government that misappropriated risk assignment and further perpetuated the cycle of greed) were really the ground zero, with even more leverage than the private sector, and also severely underregulated, despite Greenspan (for all the criticism he takes), among others, wanting to rein them in but getting too much push back on the "floor."

I refer you to an apropro WSJ article over the weekend on executive pay, which presents the case about how well-intentioned regulation ALWAYS comes with unintended consequences. Just as we are currently hellbent on capping executive pay, but forcing capital to assume misguided risk, we implemented policy back in 1992 via the Budget Reconciliation Act that made changes to the IRS tax code hellbent on aligning executive pay with performance (sound familiar?), which led to the overzealous risk-taking and short-sighted goal-setting which contribued to today's debacle. Amazing how this gets swept under the carpet for political reasons, and it's de ja vu and it's terribly ironic:

Sagarin,

I was never adamant about the unemployment rate one way or the other. Mostly because as far as I'm concerned it's not as important an issue as other factors, but the one thing you are commenting on was when I corrected another poster about what the current unemployment rate was. I then gave him what most experts were saying at the time, but I didn't take up their cause...just correcting him because he was wrong at that moment (he said the rate was higher then than it was, and he was NOT referring to some mythical "real" unemployment rate either). So, as things stand today, yes, I can see how 12% could happen before things get better. I've long said the unemployment rate is a lagging indicator and could continue to worsen even as other sectors improve. It's not a back pedal or a change in stance, because I have never said it wouldn't get that high nor have I insinuated it. It's just not an area of the economy that interests me much, so I hardly ever comment on it...unless someone else brings it up first. It's not UNimportant though. Definitely important, but because it is a lagging indicator, I'm less interested in it.

Even unemployment though is starting to look better. We've had slowing of losses for a while, and now a new survey says that the National Association for Business Economics says more U.S. firms are planning to hire and increase investment in the next six months. Reality might make that longer than 6 months out, but them saying this means they've started thinking about it, and that's the start. We won't be mired in double-digit or near double-digit unemployment for long...for a while yet, but certainly not years.

Flagpole wrote:

All that needed to be said about a 10% unemployment rate was said.

WRONG. BAD CALL, FLAGPOLE, BAD CALL. Looks like the financial talk weathered your BAD prediction two pages ago.

Since you're so quick to announce to the world when you're right, it's time to announce that you were WRONG. Else, you'd be a hypocrite, wouldn't you?

Yep, you were WRONG.

Flagpole wrote:

I NEVER call other posters here "dumb ass" or any other such thing, even when I've been proven right. I did say Steve Phillips was a dumb ass, but he's not a poster here.

Ha! Who's the "dumb ass" now, Flagpole? Ya fat slob!

BAD CALL wrote:

Flagpole wrote:

All that needed to be said about a 10% unemployment rate was said.

WRONG. BAD CALL, FLAGPOLE, BAD CALL. Looks like the financial talk weathered your BAD prediction two pages ago.

Since you're so quick to announce to the world when you're right, it's time to announce that you were WRONG. Else, you'd be a hypocrite, wouldn't you?

Yep, you were WRONG.

I'll admit I'm wrong if you make it clear to me what I was wrong about.

Good work Flagpole on playing the 'dumb' card. Bud, you got your ass kicked all over this thread!

We all know that unemployment is peaking near or above 10%, right? And that what everyone feared would be a depression six months ago has already transitioned from a severe recession to moderate growth -- of perhaps 3% in 2010, right? So what's the point of crying over the unemployment rate NOW of all times. That milk that was spilt in 2005-6-7-8. We're paying the price for horrible economic policy for most of this decade. And you think we should have found an easy way out?

You should be thanking your lucky stars that the price wasn't far, far worse.

The same point of celebrating a Dow at 10,000. It's premature either way. Start at page 1 of this thread. We have a LONG ways to go to work through this deleveraging, despite a few quarters of growth from demand being pulled forward by governemnt stimulus programs aimed at increased auto and housing demand and an unrestrained Fed that is unable to increase the velocity of money despite its penchant to print. There will be yet another price to pay, and it will be severe. THAT is the point. Good luck with that 3% growth forecast for all of next year.

"Many of my concerns about the markets in recent years have emerged because too often, financial market participants and policy makers focus on manifestations rather than causes and conditions. This is why investors produced the dot-com bubble, the tech bubble, the mortgage bubble, the debt-financed private equity bubble and the commodity bubble without thinking of the seeds of crisis that were latently emerging, or how violently they would manifest. Our policy makers have bailed out poorly run financials by creating massive federal deficits, and think they've solved the problem in the same way as someone who runs over a weed with the lawnmower. The roots have simply grown deeper, because the seeds are still there, but we've applied a few conditions in the opposing direction. Those of you who have read these missives for a long time know that my geopolitical views are largely the same. This is, because that is. This is not, because that is not.

We can have an overvalued market and the seeds of a bear market, but if we apply opposing conditions in the form of easy money in order to prop up the market and prevent the consequences of bad behavior, the seed will simply grow stronger, and its ultimate manifestation will be more powerful. We can have a mortgage market that is setting new records for delinquencies and foreclosures every month, combined with increasing unemployment and a heavy reset schedule on Alt-A's and option-ARMs that is just now picking up. But we lower the bar on financial reporting, fail to restructure debt, and ignore the strengthening seed because we're single-mindedly enthusiastic about the thin-rooted green shoots of stabilization – born solely of a burst of fiscal profligacy – then we'll predictably be blindsided when the problems re-emerge."

http://hussman.net/wmc/wmc091011.htm

1) I haven't seen anyone "celebrating" a Dow of 10,000; not in this thread anyway.

2) I work with manufacturing companies. My clients are sprinkled around the world. I just got done with a conference call to one of them in EMEA, and they mirrored what I heard in a call yesterday to a client in South America...they are seeing slow steady growth, not only in revenues, but in pipeline for future quarters. This was also the opinion of another client I talked to last week. Take that for what you will, but manufacturing often drives the boat.

Bad news out there still, and slow growth is likely. I don't think things though are as bad as some are saying. While I don't care too much about the PRICES of homes, some have been looking at that as a sign we're turning things around. Prices in the S&P Case-Shiller Home Price index of 20 cities rose for the fourth consecutive month.

And just as my brother's trucking company is having to force furlough days again and a buddy's finance company can't get ANY bank credit, which is the lifeblood of their business, and is going to start laying off this week as a result. All anecdotal of course.

Yes, home prices have risen due to government stimulus and easy year-over-year comparisons. As I stated already, even Robert Shiller himself, who called bubbles one and two, is in disbelief, because he doesn't think what is happening is based on rational, fundamental supply/demand dynamics.

Now, does that mean we can't blow yet another bubble with more severe consequences? Of course not. You really should read that Hussman article. It matters not that things are going to get "better" for a little while. But, it is possible that we "muddle" through for a mighty long time with fits and starts. Nobody ever said we wouldn't have some quarters of positive growth, just that we may be in and out of recession for quite sometime or GDP growth will come in extremely anemic compared to CBO estimates for quite some time. SUSTAINABLE 3% growth based on a solid foundation is a pipe dream. I'm hoping for half of that.

And by the way, I've already said this was a brave new world, what with global reflationary efforts quite unlike the 30s, so I'm not surprised at your global anecdotes. You should already know that, based on what I've said. But, we are not implementing sound policy to provide a structural "re-set" here in the US. Quite the opposite.

Is it true that we've increased the money supply 120% in the last 12 months? Simply printed that money! How do we survive that?