Tuesday, November 10, 2009

Real unemployment tops 22%

I have often read that real unemployment was at the 17% mark but now since the recent spike to 10.2% new information is coming out that the real number may be as high 22%. The numbers are being under reported due to a change in how people who are out of work are defined.

The Clinton administration changed the way BLS calculates unemployment statistics by excluding "discouraged workers," those who had given up looking for a job because there were no jobs to be found.

Apparently if you have run out your unemployment compensation and you are no longer looking for a job because there are none to be had you are no longer considered unemployed.

Only in Washington can you get away with fudging numbers like that.

This definition permits the Obama administration to under-report "U3 unemployment" at 10.2 percent when real unemployment as calculated before the Clinton administration redefinition is twice that amount.

The BLS still includes in "U6 Unemployment" calculations short-term discouraged workers, as long as they have been looking for a job less than one year.

These differences are illustrated in the above chart that Economist John Williams produces in the "Alternative Data" section of his website named "Shadow Government Statistics: Analysis Behind and Beyond Government Economic Reporting."

Williams concludes that the economy is not recovering, but has been stimulated by excess liquidity placed into the financial system by the Federal Reserve keeping federal-funds rates at the historically low rate of zero, or near zero.

With millions of jobs outsourced to China and India under free-trade globalism, the dollar weakness that accompanies most recessions is not stimulative, he explained, largely because the U.S. has lost so many manufacturing jobs that are never returning to its shores.

Truly, the only way the Fed can stimulate the economy is through creating bubbles generated by keeping interest rates artificially low which is calimed to be the reason for the rise in the stock market.

The stock-market bubble will most certainly burst when interest rates rise, as they inevitably will, both to fight the increasing risk of hyperinflation and to maintain the needed incentive for foreign nations to lend the U.S. Treasury the hundreds of billions of dollars monthly that will be needed to float yet another $1 trillion Obama administration federal budget deficit in 2010.

This is exactly what occured in the mid 70's when the nation experienced stagflation due to massive spending and unsound monetary policies and todays situation is far dire than then.

The 2009 federal spending surge is nothing short of historic. The 25 percent spending increase repre­sents the largest non-war government expansion since the New Deal. Domestic discretionary spend­ing (including stimulus funds) has been hiked over 80 percent over 2008 levels. As a result, Washing­ton will run a budget deficit of 12.3 percent of GDP

And with the world awash in dollars and the printing presses running 24/7 the only answer to buying back these dollars and preventing a total collapse of our currency and runaway inflation is for the fed to drastically raise interest rates which many believe will rise into the 15% to 20% range over the next couple of years similar to what we ecperienced in the late 70's and the early 8o's.

Others are not so optimistic and are predicting a total collapse of our currency and bankruptcy for the nation.

(click on charts for larger view)

9 comments:

  1. Doug,
    Good website for real information,I believe both ofus tried to get that type of info out to the mindess on the MD when the 'official' was near 7%.

    Just think what the real number is in MI !

    One has to be a complete (and I mean complete) idiot to believe the recession over an the worst behind us !

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  2. No one is talking about this on the news. SE Mi. is in a depression right now. When I see the homeless now I can't help but think,only by the grace of God go I. It is as if the govt doesn't care about unemployment or creating real and lasting jobs and business'.

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  3. Chris, driving through the industrial parks in Macomb county is real depressing, I have never seen so many empty parking lots and real estate signs in my life.
    Christopher I believe that was you who first started posting on the MD about the real unemployment rate being much higher than we are being told because of the Clinton era change in difining who is unemployed, and man did the crazy lib on that site attack you for talking about it.
    It gets even worse when you take into account the amount of people who can only get part time jobs or have taken new jobs at greatly reduced compensation.
    You can count me and my wife in that group

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  4. Oh my lord, 2010 cannot get here soon enough. Literally. I don't think there's going to be any pieces for the conservatives to pick up.

    That was a pretty depressing topic Doug, but it has to be said, the truth has to get out there. It is uplifting to be able to read you guys' blogs though, and know there are still sane people out there! Keep up the great work guys!!

    I'm going to check out that website too, looks like a great source of information.

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  5. Oh, and I heard on the radio today that even if Michigan's economy went from the state it is now to humming along like it was in the 90's, it would take until something like 2025 to recover all the jobs that have been lost.

    Thank you Jenny G. Another reason that 2010 can't come soon enough!

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  6. Thanks John For That additional information, I also read today that state revenues are down like over 30% what they were a year ago, and the idiots in this state are trying to balance the budget with one time stimulis dollars from the feds, so next year we will be right back in the same sinking boat when the next fiscal year begins.

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  7. It is getting worse no matter what that buffoon Obama says. We will have a bump in the economy but it wont last long and then inflation will set in. That will be right around the time when you will wish you had gold,a large garden and a gun to protect it all.

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  8. Doug - I read this piece on the Big Hollywood blog (that one and Big Government are great sources). I immediately thought of you because it references Picard being absorbed by the Borg, so I thought I would pass it along. I don't know if you got a chance to watch "V", especially the first episode, but it is almost... I don't know... well, it's damn eerie how they NAILED the Obamanation, 2 years before it even existed!

    http://bighollywood.breitbart.com/lscott/2009/11/13/the-hidden-truth-behind-v/

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  9. Good article There John, I do read both web sites on occasion but have not been to either for about a week.
    I really liked the point the writer brings up about how even the liberal writers of hollywood have to abandon their philosophy to make a story line attractive to an audience by injecting a conservative philosophy which is nothing more than how the real world operates anyways.

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