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80,000 jobs lost in March (and counting)

Posted by alifinmath on April 4, 2008

In the NYT:

Employers worried about recession slashed 80,000 jobs in March, the most in five years and the third consecutive month of losses.

At the same time, the national unemployment rate rose to 5.1 percent from 4.8 percent, the clearest signal yet that the economy might already be contracting. The new snapshot of the job market, released by the Labor Department on Friday, underscored the damage that a trio of crises — in the housing, credit and financial sectors — has inflicted on companies, jobseekers and the economy as a whole.

I want to make a couple of quick points. Firstly, as Nixon pointed out about fifteen years ago (in the book, “Nixon off the Record”), the unemployment figures have become meaningless. I’d not be surprised if the true extent of US unemployment was anywhere between 10 and 15%. Secondly — and a point I think I’ve made more than once — this is a crisis of American finance capitalism. We have just begun to see some of the symptoms of a profound malaise that has been suppressed for well over a decade by artificially engineered speculative booms. The root cause is possibly an increasing polarisation between rich and poor, and as a concomitant, insufficient purchasing power by the majority of working people. At the same time, I’m not sure that addressing this wealth and income inequality will solve deep-seated structural problems (e.g. anemic manufacturing, offshoring, and international competition).

For the first time, the Federal Reserve chairman Ben S. Bernanke acknowledged on Wednesday that the country could be heading toward a recession, saying federal policymakers are “fighting against the wind” in combating it.

Gee, Ben, that’s mighty candid of you.

The Fed has taken a number of extraordinary actions recently — slashing interest rates, providing financial backing to JPMorgan Chase’s takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions are ultimately aimed at limiting damage to the national economy.

Won’t work. And in any case, I think the actions are designed to help its pals on Wall Street rather than any real concern for the economy. But perhaps this is slander.

Mr. Bernanke, however, has said he is hopeful the economy will improve in the second half of this year, helped by the government’s $168 billion stimulus package of tax rebates for people and tax breaks for businesses, as well as the Fed’s rate reductions.

C’mon, Ben: with a stimulus package this picayune it just ain’t gonna happen. It’s designed more for public consumption than anything else. And even if there were a substantial stimulus package, it can be argued it would serve as just another shot of steroids to a seriously enfeebled economy.

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