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From the Notebook

Cover of "Certain Prey"

Cover of Certain Prey

It was a bit of a rough year for me, I can only hope things improve. I can tell you, in the coming year, my goal is to continue to post about once a week. I don’t want the blog to die, but I also want it to take a back seat to everything else I’d like to do with my time. I am working on another novel, I figure I’m about a year away from publishing it. My writing goals no longer revolve around the blog. And I consider that a good thing.

And now on to the notes…

 – The Twins have had a very uninteresting offseason. Every move I’ve seen so far has been sideways. There haven’t been any upgrades, but I can’t point out any major downgrades either. The Twins should be significantly better than last year if only because Mauer and Morneau should be back in the lineup more regularly. And even if they aren’t, everyone else should be healthier. Regression to the mean should provide its own big upgrade for the Twins. But I still don’t see them significantly above the .500 mark this year, or even next year (2013).

- I finished Professor Bart Ehrman‘s New Testament course from The Great Courses (“The History of the Bible; The Making of the New Testament Canon”). This is a short lecture series on the New Testament, from an historical perspective. Ehrman didn’t make any theological claims. Much of the course was spent examining the texts of the New Testament as literature. It was really spectacular, and the conclusions are a challenge to those who see the Bible not as the documents of the early Christian Church, but as the irrefutable Word of God. Even if the original books of the New Testament were the irrefutable Word, those have been lost and major discrepancies exist in the surviving ancient texts.

- Watched through the Khan Academy Banking Playlist. Sal started the lecture series by creating a simple bank and ended the series with a full explanation and commentary on the fractional reserve banking system. Very edifying. With the current banking crisis still causing problems, this is a great primer for those of us who didn’t grow up wishing to be accountants.

- Read Certain Prey by John Sandford. I figured I should read the book after I gave the USA Network movie of the same name a thumbs up. This book was your typical John Sandford, fast-moving, compelling. It’s amazing, no matter how many of his novels I read, I want to read more. The guy is good.

- Read “I, Steve”, a collection of Steve Jobs quotes regarding business, design and management, edited by George Beahm. Interesting stuff. Jobs was very much a genius, and the tidbits of his thinking should help clarify the way other business leaders think. Quick read.

-Read “Getting it Right” by Bill Buckley Jr. It is a novelization about the early conservative revival, in response to FDR’s New Deal, in the late 50’s and early 60’s. The reader follows a young couple, him a John Birch Society adherent, her an Ayn Rand cultist, through the various trouble spots of the time. As it turns out, the right spot is the mean between the two extremes. Who would’ve guessed? A good novel, and a necessary one to understand how the modern American conservative movement matured.

- Saw the “Sherlock Holmes” sequel starring Robert Downey Jr. I liked it. The pacing seemed a little slow, there were some ridiculous, uh, ‘intuitions’ by Holmes that really took you out of the moment. The plot was dumb and preachy. But I still enjoyed it.

Merry Christmas

Basilica of Sant'Apollinare Nuovo in Ravenna, ...

“Recovery”

From RCP:

From 1953 through 2007, there were only 10 quarters (out of 220) where per capita GDP was less than it had been three years earlier — clustered in the late 1950s and 1980s. And when GDP fell beneath the overall trend line, there was usually a spurt in growth that brought us back to the trend line.

This near-constant growth has given a regular boost to the pie Congress divvies up. This is why every presidential candidate of both parties over the past 20 years, including Barack Obama, was able to promise some combination of tax cuts, spending increases, and deficit reduction.

This enabled “grand bargains” on deficit reduction in the past. Take the famous balanced budget agreement of 1997. That consisted of a combination of spending cuts, but also spending increases (SCHIP began then, for example). It also contained major tax cuts. Yet because the pie was growing so rapidly, we still had enough left over for substantial deficit reduction.

But those days are over, at least in the short-to-medium term. We’ve now had 11 straight quarters where per capita GDP has been lower than it was not just three, not just four, but five years earlier. Third-quarter per capita GDP in 2011 was lower than every pre-recession quarter since early 2005. At it’s current trend, per capita GDP will not reach its pre-recession peak until 2014.

To channel Groucho Marx, with recoveries like this, who needs recessions?

Light? Tunnel? Jobs?

The November jobs report showed a decrease in the unemployment rate, down to 8.6% while the US added about 120,000 jobs. Good news? As I’ve mentioned before, and will continue to mention ad infinitum, 120,000 jobs added per month is the minimum number needed in order to keep the relative employment level unchanged. The population increases about 240,000 people a month, and we have to add about half that number to stay even. So, if we barely added enough jobs to cover the population increase, how is it the unemployment rate dropped so dramatically?

[Let's not even mention the fact initial unemployment claims spiked above 400,000 the week the December jobs report was released]

There are two answers hidden away in the report. First, over 300,000 people left the workforce, and the second reason was a surprise in the household survey:

The unemployment rate, derived from a separate survey of households, was forecast to hold at 9 percent. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.

“You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in a radio interview on “Bloomberg Surveillance” with Tom Keene.

Besides a lot of people giving up on finding jobs, the household survey also found a large number of people reporting themselves as self-employed over the last few months. It appears many of the frustrated and longterm-unemployed workers have finally been stretched to the limit and are setting out on their own.

This situation is open to interpretation, both positive and negative. The positives are obvious, people are finding a way to produce goods and services for each other, and presumably, increasing the wealth of the nation. But, we don’t know about the quality, permanence or nature of these new jobs.

I know guys who, to make ends meet, are making venison sausage and doing basic butchery for lazy hunting friends. I’ve met people who are making leather and fur mittens in their homes for extra cash (we’re talking young people in prime working age, not retirees). What percent of these million newly self-employed are going to find any level of stability?

Remember, we’re seeing this jump after several years’ worth of high unemployment. This means these people waited a long time before attempting to set out on their own. That is not something that signals confidence. If anything, it shows most of these workers waited around as long as they could for something else. Not a good sign. It’s desperation, not cockiness.

And let’s not forget the payroll (or ‘establishment’) survey. The large, stable, successful businesses that survived the recession added just 120,000 jobs. And most of those were retail, many temporary/seasonal. That does not signal growth. Companies aren’t finding new ways to make money. Perhaps they’re expanding slightly above the rate of the population increase. But that’s it. [An aside, increasing population invariably should mean increasing demand, so we should always see some growth in employment from existing firms as they work to absorb a larger customer base (if you don't see that growth, you have a possible signal of weakness in that company).]

My view is that the job market moved sideways again in December. It’s not good news. It’s not bad news. Companies barely hired enough people to cover the increase in population. 315,000 people just up and quit looking for work. Perhaps a couple hundred thousand people over the last month or two have gotten so desperate that they’re attempting to chart their own course. (The household survey and Gallup’s polls show between 200,000 and 300,000 extra people a month reporting as employed without a corresponding increase in the establishment survey. Thus, I believe that number will fluctuate wildly so I don’t want to be too specific. Maybe as many as 500,000 people have taken the self-employment route since October.)

The problem with moving sideways? You don’t get to the light at the end of the tunnel that way. I want some unambiguous number. I want to see growth commensurate with other recoveries.  I want jobs.

The Abolition of Man

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