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Morning Reading
Good morning. Finally, a jobs report we can call encouraging. After months and months of substantial losses, the job market flattened out in November. And the unemployment rate actually dropped.
The unemployment rate edged down to 10.0 percent in November, and nonfarm
payroll employment was essentially unchanged (-11,000), the U.S. Bureau of
Labor Statistics reported today. In the prior 3 months, payroll job losses
had averaged 135,000 a month.
TARP working out better than expected. Or not. (LA Times):
The TARP fund may break even, that is, on its first and biggest use of taxpayer money: investing billions -- $205 billion as of Monday -- directly in banks...
One expert, however, predicts the TARP fund will end up as much as $150 billion in the red because of losses on additional uses that the Bush and Obama administrations found for the program's money.
Why Wells Fargo hasn't paid the taxpayers back (Fortune):
...Wells has a thinner capital cushion than its rivals and a lot of loans in California, whose cities have some of the nation's highest unemployment and foreclosure rates.
It also has promised to repay its borrowings in a "shareholder-friendly" way. That's Wall Street code for "we aren't planning more stock sales" -- at a time when the feds want big banks to have as much cushion as possible.
So don't expect Wells to follow Bank of America's lead any time soon.
Why many home modifications fail (New York Times)
The bad Ben Bernanke bet (Infectious Greed)
The estate tax explained: Who it hits and who it doesn't (NPR):
"After someone dies, and someone comes in and steals from them, we consider that reprehensible, that's just despicable," he said. "But when the government comes in -- because we have the power to pass laws and legalize theft -- it's OK."
NBC-Comcast deal could reshape the media landscape (PBS NewsHour)
The big issue in recovering employment in white collar jobs is the vast pool of highly skilled independent contractors around the world who are equally skilled as US resources but at fraction of the cost.
Take this as an example. Go to the site Odesk.com. This is a site where people can request bids for everything from programmers to personal assistants to researchers. For my company I personally use an assistant in the Philippines, a programmer in Bangladesh, a graphic designer in Pakistan and a technical support resource in India, all acquired through this site. None of them costs me more than $5/hour and I am very pleased with the quality of work provided. As a business person I have to be very cost conscious so price is very important. But at a macro level this is very disturbing for the economy.
The internet creates the opportunity for individuals in these countries to provide services directly to US companies with only a small fee taken by companies like ODesk as the intermediary.
Food for thought.
A couple of questions spring to mind...
Whenever I hear about the unemployment rate dropping, my first thought is "how much of that is people just giving up?" since you have to be actively looking to be counted.
And in the reporting this morning, I think it was on the Marketplace Morning Report, they mentioned in passing that the job growth was in temporary employment. How much of that is seasonal/holiday employment that will go away next month, and how much is companies trying to expand production without hiring additional permanent employees?
Good observations, mwb. We talked about this at our morning meeting, and you'll hear more tonight on Marketplace, but there is likely a significant group that has given up and isn't being counted. Of those being counted, 38% of have been out of work for more than six months, so that's an indication. Long-term unemployment is probably the most discouraging part of the report. These numbers are seasonally-adjusted, so they do take into account the holiday hiring, but still, some analysts are saying we may go back to a bigger loss next month.
On the other hand, it's encouraging to see that perhaps companies have wrung out most of the jobs they need to and hiring could start to pick up in the new year.
