Recession Did More Damage Than You Think and it Isn’t Over
Claptrap! Nonsense! Balderdash!
Everywhere we look, someone is saying something ridiculous.
Which is good news to us. This Daily Reckoning was getting to be serious work...what with the world facing a total financial meltdown and all.
So, we're pleased to be able to lighten up by, once again, telling you what an idiot Tom Friedman is. You already knew that? Well, it doesn't hurt to repeat it...
We hadn't seen much of the old Tom recently. His recent editorials in The New York Times were no smarter than before, but a bit subdued...as if some chemical trace of good sense had slipped into his system, perhaps from a paper cut. But now, he's back, big as life and twice as stupid.
We'll come back to Tom in a moment, but since this is a financial service, we should probably begin with the financial news.
The Financial Times is looking over its shoulder. The recession is over, it says; time to take stock of the damage.
"Beyond the Crisis... With most of the world's economies officially out of recession, the FT launches a series examining the legacy of worst global economic crisis since the 1930s," says the FT. But according to the figures below the headline, the crisis wasn't so bad. The US economy walked backward only 3.5%. Now, it's making progress again.
The FT editors should keep their eyes on the road. The 'recession' did more damage than they think. And it isn't over... There's more trouble ahead.
The 'recession' in the US has wiped out...
..ten years of stock market progress. Actually, stock prices are no higher than they were in 1998...
..ten years of employment progress. You have to go back to the '90s to find a time when so few people were working in America...
..ten years of income gains. The typical household had less real, disposable income than it had 10 years ago.
In other words, a whole decade has been lost. Baby boomers are now ten years older, and less prepared for retirement than any previous generation in US history.
In Florida, joblessness has reached 11.2% - officially. Unofficially, nearly one out of 10 people is either unemployed, or underemployed. The jobless picture gets even grimmer when you consider the effect of long- term unemployment on the unemployed.
"It's a killer disease," says Thomas Cottle of Boston University. "People are going to be damaged and may not recover in their lifetimes."
The FT elaborates: "The longer people are out of work the more their skills decline and the less appealing they become to employers."
That puts the boomers in a bad spot. If they lose their jobs now they may never work again. Which means, they will face retirement with very little money...and a keen interest in making sure the feds keep the money flowing their way. They may not recover in their lifetimes...
Housing starts are at a 10-month low. Mortgage applications are at a 12-year low. As far as we can tell, both housing and employment figures are getting worse.
In short, the 'recession' is far from over, even if the feds are able to jive up the GDP figures from time to time.
Bill Bonner
for The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.