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alstry (36.08)

Functional Umeployment in Alstrynomics

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January 05, 2009 – Comments (17)

Remember, Alstrynomics is the pratical application of Economics and Political Science with a fact based approach.

When trying to determine if someone is functionally unemployed, the definition is simple.......the total income is not sufficient to meet basic expenses including home payment or rent, food, medical, education, and fuel costs.  Discretionary spending is not even factored into the equation.

For example, if a family of four with a mortage of approximately $2000 per month, food costs of $1000, health care of $800 per month, fuel and utilities $500 would need to take home approximately $4000 per month to meet monthly needs.

If that family earned less than $4000 it would be functionally unemployed...even if they never made a trip to BestBuy, took a vacation, or purchased clothes.

Now we could tweak the above a bit one way or the other, for example health insurance for many families is much higher than $800 per month.....even with employer contribution....and for others home expenses, including property taxes, insurance and maintanence may be higher or lower than $2000 per month.....for this family....it is substantially higher.....but I am trying to find some middle ground when providing numbers.

If the above family makes less than $50K per year, then Alstrynomics defines that family as functionally unemployed.  So when I make my 50% unemployment prediction...it is that I am predicting that 50% of all Americans will be below the functional employment line before we bottom out in this borrower crisis.  For a family of four, it would include four people. 

In other words, in order to be functionally employed, any family below the line needs to BORROW money to make ends meet.

I hope this clarifies things for those that didn't understand the projections provided by Alstrynomics.

Maybe this provides some perspective why Alstrynomics dictates reorganiztion before any recovery can be achieved.....in the mean time, grab your surfboard and ride this tsunami.

17 Comments – Post Your Own

#1) On January 05, 2009 at 12:18 PM, FleaBagger (28.28) wrote:

They could take in renters, get another job at a fast food place, buy cheaper food, even cut the health insurance. People have had to make do before, and they will have to again. I see no point in confusing the employment/unemployment issue.

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#2) On January 05, 2009 at 12:32 PM, alstry (36.08) wrote:

Flea baby,

Excellent point.  If they can get another job....  At $8 per hour X 40 hours per week, we get to $320 per week or about $16K per year.....assuming the jobs exist as millions and millions of jobs will be lost as retailers, restaurants and other businesses are very likely to shut down in the upcoming months.

If they go without health insurance, which currently is about 50 million, or 1/6th of the population.... if an uninsured person gets sick, the hospital won't get paid and the remaining 5/6th will have to pick up the tab.......if you want that hospital to stay open for the local population.

soon it will be 1/3 not being able to afford for health insurance and 2/3 will have to pick up the tab ......leading us to 1/2 and 1/2 and who knows where

Alstrynomics estimates, usuing current costs, at the 1/2 to 1/2 ratio.....the average family of four will have to pay about $40K per year in health insurance to keep the system going.

Fleababy, you are living in a bubble of fiction.....soon the bubble will pop in your face and you will ask yourself.......was that a 2x4 or just me?

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#3) On January 05, 2009 at 12:33 PM, FleaBagger (28.28) wrote:

To say a little more on this worthwhile point:

North Americans have come to feel like they're entitled to live on their own without extended family or tenants, eat steak (or expensive organic vegan eggplant with French truffles), drive whatever car suits their image, and if they have to borrow money to do it, well, the appreciation of their houses will pay for it all. Now everybody's in a panic because we're starting to see a little glimpse of reality.

I'm sorry, but I've had to go without things I've wanted before (and still do), and unless you make millions of dollars every year, you should have to too (not you in particular, alstry, but rather the general "you"). We live so extravagantly that we could afford to do a lot worse before it comes to starvation or exposure or even biking to work.

We need to toughen up and start working.

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#4) On January 05, 2009 at 12:35 PM, FleaBagger (28.28) wrote:

Oh, nice. You think everybody needs health care whether or not they can afford it, and you think I'm living in a bubble of fiction?

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#5) On January 05, 2009 at 12:36 PM, alstry (36.08) wrote:

Flea,

Please take my last post in response to your previous one.....I completely agree with your #3 post....100%....but remember, business will suffer as a result of what you are posting.....not a commentary one way or the other....just a fact.

If people are buying less, sales go down and businesses are not worth as much.

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#6) On January 05, 2009 at 2:18 PM, givmeabreak (28.96) wrote:

Alstry, please give a more details to what "restructuring" means, as you have mentioned this as the key to your solutiuon. I have some ideas, but want to know where you are coming from on this.

Thanks, givmeabreak

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#7) On January 05, 2009 at 3:02 PM, socialconscious wrote:

Great posts. As a salute to Mary953 I proclaim all I know is that I know nothing or the Socratic oath. Alstry makes viable points as does FleaBagger. I extend these points humbly with my own declarations

1)IMHO America's statisical conception of the poverty line is way too low and does not take into consideration geographical location. 30,000 in NYC is much less than  20,000 in Southwestern Florida when you consider housing. Also they both should be considered poverty line for 1 individual and worse for more but are not because $10,787 is according to the US Census 2007. 

2) Elementarily our American culture too greatly favors conspicous consumption of wants rather than needs.No ie needed.

Well that all!  I do ask for your opinion on comic strips on a lighter note in my blog.This issue is of course very importnat and dear to me but as one person put life is far too serious to be taken seriously. All best.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=126159&t=01001154058673654380

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#8) On January 05, 2009 at 3:04 PM, socialconscious wrote:

sorry about the typos. Boss is around.

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#9) On January 05, 2009 at 4:19 PM, angusthermopylae (39.92) wrote:

Socratic method...unemployment?  I'll bite:

"Functionally unemployed," as defined, definitely has some benefits (as a measurement,) imho.  It's straightforward, simple, and measurable.

As a side effect, to find out your status, you are forced to make an accounting of your income and expenses, at the very least.  Since it's now tax season, I imagine there are a lot of people out there who would say, "But I do that..."; but they only do it once a year to figure out Uncle Sugar's slice of the pie...

I can hear it now:  "What about the unemployment figures that we have?"  Well, there seems to be lots of reason to suspect that those numbers are...ahem..."poorly calculated" to say the least.

This article seems to sum up a lot of what I've heard, suspected, and sometimes have found when looking at unemployment statistics. Once you start "adjusting" who is excluded from the workforce, you can make the official unemployment figures dance all over the head of a pin.

You would think that government unemployment statistics would be fairly straightforward:  Take the number of potential workers, subtract the number of people with jobs, and divide by the number of potential workers...tah-dah! But no--you have to start excluding (according to taste) students, disabled, "haven't found a job in X weeks", retirees (who are now working more), "self-employed" (in quotes because the definition seems to change), "part time" (again, the numbers changes...and if we can exclude them, life gets much better), and a host of others--no wonder people don't trust the official numbers.

And Consumer Price Index?  Ha!  While gas was at about $3.75/gallon and food prices were rising accordingly, the announced CPI kept excluding food and energy--the things that were hurting the average consumer the most.

(Take this either way, but the Burea of Labor Statistics has even put up a FAQ site addressing what they call "misconceptions" about the CPI.  Regardless of which side of the debate you fall on, it's funny that they put out a public explanation for each of the major criticisms...Streisand effect, anyone?)

True, you can argue "the numbers" until you're blue in the face and come up with research to back your side.  But that doesn't make it true, does it?

(Heck, I even came across a paper arguing that big government appears to cause more unemployment!   (I am just an economics diletante (sp?), and I don't know the background of the paper writers--it's got lots of big formulae and latin phrases, so my poor aerospace and engineering mathematics background is insufficient to judge...but that would be a good argument in another blog, no?))

What causes the suspicion is the fudge factors--include this, exclude that, change the basis yet again...but people (and governments) live and die  by those numbers.  Sometimes literally.

As for me, I'm taking the practical approach:  the CPI excludes food, but food costs money.  Instead of buying meat at the store, I'm buying half a beef (half of a slaughtered bull) from a neighbor of mine.  At 400 lbs, purchase and butchering ends up costing me $600...$1.50 per pound for everything from burgers to sirloin and filet mignon.  And since the CPI FAQ specifically mentions not including steaks, I can't figure out if I'm helping the economy, hurting it, or just making out like a bandit.

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#10) On January 05, 2009 at 5:02 PM, socialconscious wrote:

angusthermopylae we may not agree 100% but I respect your view and hey at $1.50 a pound Porterhouse you good people in my book. Great post. Yes the government does not have a clue and yes have to be more than a rocket scientist unfortunately. In my conservative reckoning add 4 % to unemployment thats true unemployment with folks who stopped looking. Underemployment no clue. CPI and inflation should be your regional cost of a can of  12oz Pepsi LOL in 1985 a can of Pepsi in my neighborhood was 45 cents today $1. Its strange but it somehow works out in my simplenomics.  IMHO all SC 

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#11) On January 05, 2009 at 5:08 PM, socialconscious wrote:

To be clear Simplenomics is my new new aged model thing not a dig at anybody.I just invented it last post while thinking about steak. 

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#12) On January 05, 2009 at 6:46 PM, eldemonio (98.64) wrote:

Being functionally unemployed sounds a lot like being an irresponsible dumbass.

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#13) On January 05, 2009 at 7:34 PM, alstry (36.08) wrote:

But my friend, if you live in a nation full of irresponsible dumbasses.....you too are a jackass.

Get ready to kick hard.

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#14) On January 05, 2009 at 8:25 PM, givmeabreak (28.96) wrote:

Al, please give some explanation or examples of restructuring as you think it should go. Please be specific or use analogies.

Thanks in advance, giv.

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#15) On January 05, 2009 at 8:42 PM, alstry (36.08) wrote:

giveme,

Bankruptcy....chap 11, or 7 or 9 or 13.

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#16) On January 05, 2009 at 9:00 PM, givmeabreak (28.96) wrote:

But who is gonna have the money to buy the companies that go under if it happens on such a large scale?

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#17) On January 05, 2009 at 10:20 PM, alstry (36.08) wrote:

Why do you think I gave you so many numbers...each one provides a different option......no choice is good.....the other alternative leads to a much more disasterous result.

Do you give the patient chemo or let em die of cancer????

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