Friday, August 15, 2008


Claims for unemployment benefits are rising sharply now.

Initial Claims for Unemployment Insurance (recessions are highlighted)

In my opinion jobs are the most crucial element for the future direction of the economy, dependent as it is on consumer spending. There is an interesting aspect here: most previous slowdowns were caused by excess inventory build-ups, with unemployment claims rising fast as manufacturers cut back on production. This is no longer the case because:

a) Manufacturing is no longer the driver of the economy, having previously shed millions of jobs in the 2000-04 period and,
b) The slowdown is not caused by excess inventory but by excess debt.

Job losses are now happening increasingly in services, particularly the FIRE sector where - unlike plant closures - mass layoffs simply do not exist. Rather, job losses come in dribs and drabs; also, some people may still be listed as employed but making very little - if any - money. For example, realtors and mortgage brokers who rely entirely on commission.

The bottom line is that unemployment benefit data is slower in building than previous recessions and will likely persist for longer than usual.


  1. You decided 'employer'

    Welcome back

  2. More miraculous even than the raising of Lazarus, the return of Hellasious after two weeks in the tomb--museltov!

  3. Unemployment, IMO, as an economic measuring tool, is akin to using a piece of wool on a tree to determine the weather (it it is wet it is raining if it is not then its sunny, or at least not reaining).

    The published unemployment figures do not take into account those not eligible for unemployment, those who left the job market and why people are not filing. Most significantly it does not measure UNDER employment. Wages of individuals who have dropped dramatically because they have had to accept lower paying positions and why.

  4. Bravo Goldie, very well said!

  5. Well said goldie. I seems that almost all data released by the government is padded somehow, so that things don't appear as bad as they are.

    Welcome back Hell.

  6. Anyone interested in the padding of govt data might want to check out some of the video presentations at:

  7. Golide says:

    "Unemployment, IMO, as an economic measuring tool, is akin to using a piece of wool on a tree to determine the weather (it it is wet it is raining if it is not then its sunny, or at least not reaining)."

    I thought that the point of these unemployment figures was that where they went up really quickly, then they were essentially coincident with a recession.

    They may be well-massaged, but the information appears to be contained in the steepness of the curve, whether the values are massaged or not.

  8. State officials say California's unemployment rate jumped to 7.3 percent in July, up from a revised 7 percent in June.

    The jobless rate announced Friday by the state Employment Development Department represents a significant increase from the 5.4 figure in July 2007.

  9. I guess if the piece of wool is not on the tree then we can deduce a strong wind has just come. If we then take shelter and survive a tornado we can attribute our safety to this great barometer.

    Unemployment as an indicator of abnormal activity is fine but why is it used as a barometer and justification for activity that is not indicative of really much all. Seems like it is used to call the abnormal normal and the deviant progress.

  10. Can we get a comparison line to include the number of new people turning to porn, be it professional or amateur over the same time line?

    As well as a comparison line of porn bandwidth utilization over the same time line?

    I would think these would produce surprising data points.

    I also assume the foot traffic in San Bernardino County commercial zone warehouse buildings has increased.

  11. Think we are looking at the U3 series, y'all might be interested in the U6 series which includes many of the folks undercounted by the U3 headline unemployment numbers...

  12. China is now the manufacturer, and there is overcapacity in China, that is problem.

    If you look at the economy only within the USA then you are a retard.

    The world has become very global, old models of import / export no longer apply as labor and capital now easily move across borders.

  13. is as good a place as I know of to get the skinny on the eCONomy. Welcome back, Hell.

  14. is as good a place as I know of to get the skinny on the eCONomy. Welcome back, Hell.

  15. Hi,
    Can't find your contact info on the website.
    There's something I'd like to disscuss about your blog,
    My e-mail is:

  16. Looks like Jenny misses you as well Hell ;-)

  17. 'Whilst the cat's away'

    The Bill Collector Cometh. This is the title of Chapter 13 of Galbraith's 40th Anniversary ed. of The Affluent Society. Pretty sober and somewhat timely commentary.
    Make a good title for a blog.

    Re:'The Origin of Wealth' by Beinhocker.

    Very interesting and different but self-denotates on 1st sentence, final paragraph, page 319. What is it about contemporary economists that they have such a religious faith in the predictive power of mathematical formulae?

    Re: 'The Entropy Law and the Economic Process': by Georgescu-Roegen.

    This is a deeply philosophical and scholarly text on economics. Difficult to read; needs a lot of reflection.

    Brian P

  18. Everybody:

    Don't forget about I.O.U.S.A. tonight in theaters all over the country.

  19. Just got back from the movie IOUSA.
    GREAT. The post movie discussion though was a little disappointing in that Buffet sounded like a typical newbie stock broker with his "the pie is just getting bigger so it don't matter how much we give away" analysis. I was starting to expect him to say " you know since 1935 the stock market has only gone up in the aggregate" just like the 21 year old who is managing my 403b.

    Loved Walkers overall analysis, but was disappointed in the lack of accountability toward the bureaucracy that infects our government like Lou Gehrigs disease. As if an upstart cowboy Mr. Smith goes to Washington type can change things....

  20. Goldie:

    The guy that I felt added the least to the conversation was the guy from the CATO institute. Not that I really expected anything different from him. His call to immediately "privatize" Social Security and his statement that "you can't bring down the price by adding more demand" (obviously meaning: creating more patients to coverage by expanding Medicare to all Americans) didn't help foster the discussion of the debt dilemma we face, IMO.

    I didn't get the same message you did from Warren Buffett's statement regarding future productivity. He wasn't talking about the stock market; he was talking about the economy in general. What he was saying was that even as Social Security obligations would be increasing, future economic growth could provide an adequate tax base from which to fund it.

    Although, at the same time, I did agree with David Walker's statement that we should compare current debt levels to GDP.

  21. Hi okie,

    I only mentioned the stock market as an analogy, as I felt Buffet was resorting to a pollyanna perspective normally utilized by every wannabe wall street maven. I think Walker shared this feeling as he respectfully disagreed with Buffet; pointing out that the debt figures were listed as a percentage of growth thus ALREADY taking into account the ever growing economic pie.

    I agree with you about the guy from Cato Insititute and found it funny that he was the only "economist" on the panel. I was underwhelmed by the AARP response as well.

    Becky Quick looked hot as ever though ; )

  22. Crickets chirping

  23. Hell,
    Where are you? Miss your stories,
    and financial scoop.
    Hope you'll be back soon.


  24. *chants*

    We want Hel! We want Hel!

    To paraphrase the great Stephen Tyler - All those late-night blogging promises.. I guess they don't mean a thing!

  25. Hel said that reserve status of the $ was the basis of US imperium and would never be jeopardized for foreign creditors; well it seems that China has pulled a gun on the Treas and demanded payment or else "the end of the current international financial system, please see:

    Please check out this article for an evaluation of political personality very similar to what I laid out in my previous exchange with YKW (rather not re-ignite the kindling)

  26. Dink,
    You might be interested in this article about off-grid living a couple steps up from yurts:

  27. Yoyomo,

    I'm heading out camping again, but will check out the links when I get back (Thx!).

    Something caught my eye in "Long Emergency". I don't have the exact quote, but along the lines of "Every time we drive we're burning the stored energy from millions of years of sunlight". Sometimes you hear a new phrasing of something you already knew and your mind recoils like its been stung....

  28. Hell baby,

    Where are you? Your site is dying on its feet. Quick, come to the rescue and write someting. Anything! Talk about the weather. The Republican Convention. Hurricane Gustov. Just scrawl your name on a scrap of paper put it in a bottle and fling into the sea off Coney Island. Something, anything to let us know you're still there.

  29. This website is for American whiners. What is the loss of a few jobs. In Singapore, thousands lost their electricity because they can't afford to pay the state own electricity company. (visit my blog :

    When the American economy sneezes, the Asians half way around the world end up in much more pain.

  30. How about deleveraging? Not even a little post on whether you think it has started?

  31. De leveraging, What will that look like?

    First HELOC's will be canceled then Credit Cards then you will need a 60% down payment to buy a car.

    Yugoslavia all over again

  32. great stuff, the government have a way of cushioning or padding issues such as unemployement so figures dont look bad which in turn makes the government look good..

  33. Sudden Debt
    August 15, 2008

  34. Hell,

    The Indian's are getting restless, and I hear the drums beating at a distance...where are you!! I bet ship wrecked on some tropical island with a ol' bottle of rum!! Summer is almost over...submerge from where you are before there is a mutiny on you blog site!!

    Captain Hook & Pocahontas

  35. I think the crystal ball is a little cloudy and Hel is rightly reluctant to integrate his podiatry w/his orthodontistry. When Paulson & Bernake clarify further the extent of their intervention we'll be getting more commentary from Hel.

  36. a monthly epistle from Hel is more spot on than any government report.

    the mauve book?

  37. So Jessie, at his Cafe Americain is irreverantly posting the GSE deal will finally allow a monetization solution to our debt problem:

    Paulson: "...the GSEs will modestly increase their MBS portfolios through the end of 2009. Then, to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10 percent per year, largely through natural run off, eventually stabilizing at a lower, less risky size."

    Jessie's response: The debt will be monetized until the dollar falls from sheer exhaustion. (Have you ever known ANY government program with lots of influential recipients on both sides of the political spectrum to be reduced in size? This is not just a policy statement; it is a political IQ test.)"

    Would you agree?

  38. Well if this bailout didn't get a post out of Hellasious, nothing will.

  39. Dear Anonymous

    Nothing will get a post out of Hel, bailout or no bailout--as they say in the Mafia: "He's with the fishes--off Long Island Sound."

  40. Com'on fellas, the poor guy's probably had a nervous breakdown. I mean who the hell (pardon the pun) wouldn't? trying to keep up with all the stuff that's going on what with Fanny & Freddy (only to name two). He's decided to keep his head down and lie low for a couple of weeks (months?). Give the guy a break, he's been pure wisdom up to now and for my money he'll bounce back bigger and better than ever. You wait and see. I'm puttin' my money on Hell. I mean, hell--why not?

  41. Whatever the reason for Hell's absence, best wishes to him and looking forward to his next insightful post.