It takes years of deleveraging before jobs can come back.
By Daniel at 24 October, 2009, 9:41 pm
quote:
the dominant reason for unemployment in the current economy is permanent separation. Permanent separation is when a job is cut and it’s never coming back…versus temporary layoffs, quitting, and other types of job losses.
It’s a unique point because the percent of permanent job losses haven’t been this high in over 30 years, and as the article goes on to say, “Never, in the six recessions preceding the latest one, did permanent separations account for more than 45 percent of the unemployed. The current percentage stands at 56 percent as of September and appears to be still climbing.”
The post came to our attention via CalculatedRisk which, in looking at the finding commented, “So far the current recovery is even worse than “jobless”; it is a “job-loss” recovery.”
http://dailyreckoning.com/percent-of-permanent-job-losses-at-highest-in-over-30-years/
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When you look at a chart of total debt, it goes back decades in its buildup. It is in the last 10 years or so that it went parabolic. It is now greater by 100% than it was leading into the great depression and that took ten years to unwind regardless of what the government did to try and shorten it. The debt has to be deleveraged in households, corporations, cities and states.
The government can focus on jobs all it wants but, that means any jobs created is from more debt when we already have too much debt to grow or tax out of. Also, any jobs created would disappear when the stimulus was pulled.
The government needs to focus on dealing with a depression and massive unemployment and the destruction of the private sector that is needed to fund government. Tax revenues in the last year from corporate sources fell 57% and from individuals 22% and that was earlier this summer when it was reported.
You can’t keep adding federal debt when tax revenues keep falling because we now are borrowing more than the combined trade surplus of the world which is where our loans usually come from. The world is running out of money to lend us and that is why the FED is monetizing debt and playing currency swap games and buying toxic assets so banks have money to buy debt with. It is a giant Ponzi scheme where the more we borrow, the more we need to borrow.
- JP
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