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alstry (< 20)

Alstrynomics Business Lesson 103



February 04, 2009 – Comments (6)

If people are still losing their jobs.....conditions are getting WORSE...regardless of the rate.

Occasionally I watch CNBS while shaving.  It is incredible the nonsense these guys put out there sometimes.  There is an older guy and decent looking brunette in the morning as the market opens.   When I heard the guy try to convince viewers that the rate of job losses are slowing and somehow implying that things are nearing a bottom, I almost had to break out laughing at how rediculous the statement.

Remember, a person approaching death in a hosptal is also nearing a bottom.  Absent resurrection or reincarnation, it is a bottom that most rarely recover from.

If a person is losing blood, regardless of the rate, there is blood loss.  As more and more blood is lost, the closer that person gets being critical and cardiac arrest....or dead.  The analogy applies to the economy as well.  As more and more Americans suffer NET job losses, unemployment keeps rising.  If the trend continues, at some point, so few are working that they can't support the burden of the unemployed and the economy basically shuts down.

What should concern you is that job losses continue.  The economy is getting closer and closer to being critical.  The fact that NET 500K lost their jobs this month versus 600K last month does NOT make anything any fact it is much worse....500K worse.   That is 500K not paying taxes and 500K more collecting unemployment.

Lesson 103...

If there are NET job losses...conditions are getting 500K...MUCH WORSE....not better...regardless of the fact that it may have been a bit less than last month.

6 Comments – Post Your Own

#1) On February 04, 2009 at 12:00 PM, jesusfreakinco (28.32) wrote:

At some point, perhaps job losses are a lagging indicator, but we are far from that point yet...

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#2) On February 04, 2009 at 12:27 PM, BradAllenton (31.53) wrote:

The 500K is the ADP# the real # will be bigger.

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#3) On February 04, 2009 at 10:21 PM, Seano67 (24.38) wrote:

Well, we could also see the rate of job losses dramatically slow. Maybe we've already seen the peak, as many companies are already done downsizing, because they've looked ahead to lowered future earnings, and in response to that cut out the excess 'fat' (so to speak) in the form of large-scale layoffs. So those companies are done for the foreseeable future so far as laying off workers goes, because they've already made all the cuts they felt they needed to do.

We'll see more cuts, of course- but hopefully we've seen the worst of them, and maybe that's reflected in the fact that the rate of job loss did drop from January to December. People can try and spin that into a negative if they'd like, but for me I can only see it as being a positive thing. 

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#4) On February 04, 2009 at 11:21 PM, cwlawrence (< 20) wrote:

So, in the past, when there were NET job losses, did America bleed out and die?

Alstry, I get that you think things will get worse. In fact, I think everyone on CAPS understands that (thanks for beating that into our heads, btw). But your argument is weak a is highly specious. You are simply playing on fear.

I would like to hear you make a quiet, reasoned argument that supports your views without coming out like you are trying to force-feed us some nihilist propaganda.

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#5) On February 05, 2009 at 12:46 AM, uclayoda87 (28.77) wrote:

Too many companies are making large job cuts in order to try to save enough cash to survive.  They are basically telling us that they don't believe that a recovery will happen for at least two years.  No employer wants to cut job for a short term recession, since it's difficult and expensive to rehire when you need more good workers.

The magnitude of the job cuts that we saw over the last few months should not be ignored.  As another blog pointed out, the optimists are the ones that die first.

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#6) On February 05, 2009 at 11:50 AM, jgseattle (26.48) wrote:

I am not sure all NET losses are worse.  The trend is your friend!  However, I do not think we will see a trend towards job creation for a while, much less expanssion.

The delfationist, Alstry, point to the job losses, the lost buying power and the fear of the employed to spend will start the U.S on a deflationary spiral.  I agree to an extent.  I will be convinced of deflation when we start to see wages dropping across the board.  If wages start to drop then we are in for a lot of trouble.

I have hammered this before but the statistic with the best corelation to housing prices is employment.  So I do not think we are anywhere near the bottom on housing and the drop in housing prices will lead to more banks failing.  So we have a ways to go before the bottom.

Also, the only job losses you are hearing about are at public companies.  I was told because of the slowdown a local retailer had to layoff 20% of their corporate staff and reduce store staffing by 10%.

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