Why Does it Matter?

Many people seem to think that U.S. markets are jittery because of fears about what developments in Europe might mean for the rest of the world. But even if there was no sovereign debt crisis, I would be hard-pressed to overstate just just how bad things are here at home. While I've posted plenty of articles detailing the dismal state of the U.S. economy from the perspective of the man in the street (not the one on Wall Street, mind you), all you need is Google, an internet connection, and a few moments of time to see that there's plenty more bad news where the rest came from. After reading the following articles, the first thing that pops into my head is: Why does what is happening overseas even matter?

"In Brutal Job Market, More Than a Million Quit Looking" (CNBC.com)

If you think the jobs situation has become pretty hopeless, you're not alone. Roughly 1.1 million workers have given up hope of finding employment.

The staggering level of "discouraged workers" as the government calls them has swelled to historic proportions in 2010, past the million barrier for the first time since the Bureau of Labor Statistics has been tracking the number.

Though a bit off its all-time high of 1.2 million recorded in February, the metric stands as perhaps the most daunting statistic of last Friday's gloomy jobs report, which showed that almost all the new employment is coming from temporary government Census jobs and not the kind that will sustain an economy.

"The fact that people are sitting down indicates just how bad the market is for some categories of people," says Peter Morici, professor at the University of Maryland's Smith School of Business and the former chief economist at the US International Trade Commission.

"Drag on Recovery: Consumer Debt-Cutting" (Wall Street Journal)

Anyone who has struggled with addiction knows recovery is a long, slow process.

So it shouldn't come as too much of a surprise that the economic rebound is moving at such a gradual pace.

Despite a vigorous bounce-back in corporate earnings and a veritable factory boom, job growth is decidedly sluggish. Gross domestic product is growing at only half of the 7% to 8% pace that typically has been seen after past deep recessions.

One reason: deleveraging. After years of bingeing on debt, U.S. households are paring back. Those not doing so by choice are often being forced, because lending standards remain tight.

The question now, both for consumer spending and growth more broadly, is how much further the process has to go.

The answer is probably a lot.

"Employers Lowballing New Hires" (Wall Street Journal)

The job market may be recovering, but some salary offers are still a few years behind.

Since the labor market began picking up steam, companies hiring for entry-level or administrative spots with pay that would normally range from $40,000 to $50,000 have been offering workers $28,000 to $38,000, says Randy Miller, founder and chief executive of ReadyMinds, a Lyndhurst, N.J., provider of online career counseling and coaching.

 .For workers further up the food chain, an offer that might have been $100,000 a few years ago is now coming in at $85,000 or $90,000, he says.

"Companies are more worried these days about margins, profitability, and they are cutting costs across the board. Even though [workers are] qualified and have prior experience, the hiring department has been told to set a budget at a lower range," Mr. Miller says. "Everybody is more price-sensitive these days."

"Big Increase in Mortgage Foreclosures Predicted for this Year" (Miami Herald)

Real estate experts predicted this week that 3.5 million homes nationally will go into foreclosure this year as risky adjustable-rate mortgages written in 2005 reset and unemployment continues.

That's up from 2.8 million homeowners who faced foreclosure in 2009, and sets a pace that isn't likely to plateau until late 2011, said RealtyTrac Senior Vice President Rick Sharga.

Sharga spoke this week in Austin during the 44th annual National Association of Real Estate Editors conference.

``The second wave of toxic loans is about to hit,'' said Sharga, whose Irvine, Calif.-based company tracks foreclosure filings.

Sharga's panel of speakers, which included a Bank of America representative and Arizona-based mortgage modification executive, painted a bleak picture for anyone who thought the worst of the real estate meltdown is over.

"CFOs Signal Worsening Job Market" (CFOZone.com)

More bad news on the hiring front.

CFOs say they are less likely to hire people now than they were three months ago.

According to the latest quarterly Robert Half Financial Hiring Index, six percent of chief financial officers said they plan to hire full-time accounting and finance employees during the third quarter of 2010.

In the prior survey conducted three months ago, seven percent of CFOs indicated they planned to add full-time accounting and finance employees during the second quarter. At the time, the folks at Robert Half celebrated the fact this was the highest hiring forecast since the first quarter of 2009.

Well, that party was short-lived.

Meanwhile, in the latest survey, nine percent of CFOs said they anticipate staff reductions. This is up from eight percent in the prior quarterly survey.

Add it up, and CFOs are more pessimistic now than they were three months ago. Not a recipe for bringing down the nation's stubbornly high unemployment rate.

"More than 40m Now Use Food Stamps" (Boston Globe)

WASHINGTON — The number of Americans receiving food stamps in March topped 40 million for the first time as the jobless rate hovered near a 26-year high.

Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases totaled 40.2 million, up 21 percent from a year earlier and 1.2 percent more than in February, the Department of Agriculture said yesterday in a statement on its website. The number of recipients has set records for 16 straight months.

"Food Pantries Fear the Future" (Times Herald-Record)

Less assistance, more demand strain resources

KINGSTON — With donations drying up, state money cut and demand skyrocketing, food pantries and soup kitchens in the Hudson Valley are struggling to stay afloat.

"We're doing so much more with fewer resources," said Diane Reeder, executive director of Queens Galley in Kingston. "Even our regular fundraisers aren't pulling in the kind of money we're used to seeing."

For instance, Reeder and the soup kitchen — which serves about 9,000 meals a month — usually raise at least $5,000 by selling food at the Hudson Valley Mayfaire.

But this year, the organization walked away from the May event with only $600.

"We're going into our biggest season with no money and no help," she said.

The financial problems are widespread.

The Regional Food Bank of Northeastern New York expects to receive a cut of $100,000, to roughly $3.2 million, from the state's Hunger Prevention and Nutrition Assistance Program for the grant year that begins July 1, said Executive Director Mark Quandt.

The Florida Community Food Pantry these days runs almost entirely on that money.

The pantry exhausted its grant two months ago and has been dipping into reserves to fund operations. For the first time in 15 years, Florida pantry Director Denise Thibault has to eye the bank statements very closely.

"I think everyone is feeling the pinch," she said. "My concern is, I want to make sure that we don't get into a position where we can't supply food."

Money isn't the only problem.

With the school year nearly over, many kitchens and pantries are bracing for increased demand from families whose children rely on the schools for meals nine months of the year.

Comments

[Blurtman]

It can't get any worse. Dow 14,000!

[MichaelN]

"The Florida Community Food Pantry these days runs almost entirely on that money.

The pantry exhausted its grant two months ago and has been dipping into reserves to fund operations. For the first time in 15 years, Florida pantry Director Denise Thibault has to eye the bank statements very closely.

"I think everyone is feeling the pinch," she said. "My concern is, I want to make sure that we don't get into a position where we can't supply food."

Money isn't the only problem.

With the school year nearly over, many kitchens and pantries are bracing for increased demand from families whose children rely on the schools for meals nine months of the year."

Question: How much food is being distributed by this food pantry (and others) to illegal immigrants?

I know that illegals are not initially motivated to come to US to collect food from pantries, but since they can't qualify for food stamps (unless they have an "anchor baby"), and they, like many other Americans, are not earning money like they used to, am I cold/callous/cruel to be concerned that dwindling tax revenue and personal donations to pantries (overwhelmingly provided by non-illegals) are being used to feed non-Americans - while American citizens go hungry?

It is my opinion that illegal immigrants are today motivated to come here and remain because they find that our country will provide food, medical care and other benefits for free - while they keep searching for jobs that will pay them wages which are greater than what they could earn in Mexico, etc. It's a win/win for them. And don't think that they are also not aware that Obama and the Democrats want amnesty for them AND if they have an "anchor baby" then even more options open up.

Our annual deficit exceeds $1.5 trillion and there is NO desire by most Democrats and many Republicans to do anything about this - a spending problem begun by Mr. "Compassionate Conservative" and worsened by his Republican Congress. Pelosi and the Democrats campaigned on putting an end to this free-spending and they were also going to promote the most "ethical Congress ever!"

Our "anything goes" approach to life leads me to one simple conclusion:

We're doomed. Please tell me that I'm mistaken - and where/why I am. I'd like to have a good night's sleep.

[Tim]

Sorry bro, no sleep for you.

[Angelo]

One good thing, is that those who have money can get some great deals.
One of my neighbors is in the market for a new Lexus.
He found one, list price $70,000.
Dealer will sell for $55,000.

People who have cash, not credit, and going to be in fat city for the next 5 years.

[Blurtman]

Re: the market - it is all bullshit anyway, but serious bullshit, no doubt.

Dividend paying stocks can be validly priced, as there is a real comparitor - bonds.

But using discounted future earnings and historical PE's is just speculation. As most stocks do not pay dividends, equity prices, and the stock market are/is pure bullshit.

So you may as well fret about how many birds will land on a wire, or if Lady Gaga is really a man. It is all bullshit speculation.

[kevinearick]

The Analog Economy

The kernel installation is complete. Do not allow yourselves to become dependent on technology, which determines the course of money, which determines economic outcomes. Chasing symptoms is like yelling at a wall, expecting it to move. Not a good approach.

You may want to get out of the way of that train barreling down the hill. So far, you have just been watching the rack. Technology is a tool, nothing more, nothing less. That’s a $500T debt load, and the digital economy is bankrupt. Don’t stand in the path of the backlash. The cue ball has been struck.

You have the new kernel, data structures, and traversal mechanism. You have everything you need to build ladder and wiring diagrams of the existing global economy. What you do with them is up to you. 7 billion people are at the starting line. The system will be brought into equilibrium, one way or the other.

Pack light, and stay out of the path of the debris, falling into that black hole. This time around, build the tools to make the path, instead of following the path made by the tools, and the money will follow you. It’s just money; it only knows what you tell it. It cannot learn. But be careful what you tell it; it is very good at algebraic reduction. Only travel down the same path twice if you want money to expend itself building a trap, if you need some gravity to jump a gap.

The planet has recognized the digital gravity and has a firm grip on it. Don’t waste your energy yelling at the wall. You only need to observe gravity to maintain the gap. If you still have no idea what I am talking about, marry someone who does; become a community nurse, electrician or farmer; start a small business; and have kids. Everything else in the economy is in excess supply; that’s what’s causing the black hole. What they decide to do with all that Caterpillar equipment will be interesting.

Addiction to oil, or anything else, is just a symptom. Look around. Who is going to lift that $500T load? Certainly not the people who created it. All they can pay you is their remaining borrowing authority, ballpark $12T, which means that the digital economy is a sunk cost, worth more dead than alive. They will cede control, and if they decide to blow themselves up, the job will be that much easier.

There is much more to an analog wave than the simple two-dimensional wave represented on the oscilloscope. Don’t take my word for anything. Find out for yourself.

… a hydraulic generator and a comm station.

[Doug K]

Jobs are being permanently eliminated on purpose. Why? Because fighting inflation has long been priority one. Give all those unemployed a job, they'll start spending, small business will expand, and the prices of non-renewable resources will climb significantly. That will snowball into renewable commodities rising too.

Job losses were "a given" once all the bailouts had pumped so much "free" money into the economy.

Either sacrifice some fraction of the population (by eliminating their ability to spend), or risk hurting everybody with hyper inflation

[Laura]

I've been on food stamps twice in my life, once when my children were little, and now as a disabled adult. I have NEVER been to a food pantry. If people can't afford food, then they should be eligible for food stamps.

Other than illegal aliens, who exactly benefits from the food pantries? If you are getting food stamps AND your children are getting free meals at school (sometimes lunch AND breakfast) then you should be able to save up benefits on your SNAP card or save up canned goods in your kitchen for the summer if you want to have a little extra during the summer. Otherwise, the standard food stamp benefits are adequate to provide your kids with three meals a day. People who are getting full food stamp benefits should NOT be going to a food pantry or soup kitchen.

People who are getting full food stamps AND free meals for their children 9 months of the year are getting MORE help than they need, not too little. Besides, a lot of schools in bad neighborhoods continue the free meals throughout the summer break.