from
(snip)"Catch 22
In the rush to maintain profits in the wake of an economic slowdown, corporations who outsource white collar will be cutting their own throats if such outsourcing commences on a massive scale. After all who will be left that can afford to buy discretionary items? The problem is, if a corporation does not outsource but the competition does, the former will be driven out of business by a loss of business. It is the perfect "catch 22" otherwise known as "Economic Zugzwang" corporate style."(snip)
in cause you're wondering what "Economic Zugzwang" refers to ...
(snip)"In Lewis Carroll's Through the Looking-Glass there is an incident involving the Red Queen, a representation of a Queen in chess, and Alice constantly running but remaining in the same spot. The scene is often referred to as The Red Queen's Race.
"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else -- if you ran very fast for a long time, as we've been doing."
"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
I picture Ben Bernanke as the new Red Queen.
He is now trapped in Zugzwang.
Definition: A German term for the obligation to move. All legal moves lead to a worsening of the position."(snip)
--- I would make the observation that it isn't just Alice and Ben Bernaake of the US Fed that are running like hell but not getting anywhere lately - as any dancer who worked in clubs 5 years ago versus today can easily attest !
This point is now being noticed by corporations as well as individuals, since many of those former highly paid white collar and blue collar manufacturing workers who were outsourced over the past couple of years have now run out of credit, have now run out of money, and are thus no longer able to afford to buy the products that their former employer produces ! Lower sales figures result in lower profits for those former employers, who must then outsource even more white collar and blue collar manufacturing jobs in order to remain profitable ... but this will in turn only lead to even steeper future declines in sales of company product as even fewer Americans can afford to buy that product.
Where does it end ? Theoretically, the American company that outsourced winds up with zero employees other than the executive floor, an import desk, and a distribution agent. The ex-employees of that American company wind up underemployed / unemployed and broke. Ironically, the foreign white collar and blue collar manufacturing workers who received the work outsourced by the American company wind up working for even lower wages in order to produce a product for export to the USA that will be priced low enough that underemployed / unemployed Americans can still afford to buy it ... In other words, the rich get richer, the poor get poorer, and anybody in the middle is Zugzwanged big time.
and on the Tale of 2 Surveys ...
(snip)"Bulls, Elephants, Jobs
MarketWatch is reporting October jobless rate at lowest rate in five years.
Although U.S. nonfarm payrolls grew by a lower-than-expected 92,000 in October, this was not the entire picture. The unemployment rate fell to 4.4%, the lowest level since May 2001, the Labor Department reported Friday. Economists were expecting payroll growth of about 123,000, according to a survey conducted by MarketWatch. The jobless rate was expected to remain at 4.6%. The job report may dispel some worries that the economy is slowing sharply. Third quarter gross domestic product fell to a 1.6% annual rate from 2.6% in the second quarter.
The above numbers are even worse than they look given that government added 34,000 of those 92,000 workers. How many time can one paint lipstick on a pig and have the results still look pretty? That is what I want to know.
Assuming that one believes the GDP numbers how the hell does this anemic report dispel worries that the economy is slowing? One either believes the numbers or not. For the record, I don't believe the GDP numbers. They were much worse. I talked about this in Numbers Game.
If you are bullish write this down on a piece of paper and recite it every day: "Jobs are a lagging indicator". That jobs are doing so poorly this far along in a recovery is telling. In fact, this "recovery" is now over and jobs have only one way to go and that is downhill."(snip)
(snip)"The slump in residential housing is clearly contributing to the diminished job gains in recent months. EPI's index of jobs related to residential housing, including construction and real estate, fell by 33,000 last month, led by large losses in residential contractors. As shown in the figure, thus far this year jobs related to housing are down 26,000, compared to a gain of 245,000 over the same period last year.
Once again, we have a tale of two surveys, with the household survey painting a prettier picture of job market conditions than the payroll survey. However, the payroll survey is widely agreed to be a more reliable measure of monthly job changes, and while it shows moderate gains so far this year, it also reveals steadily slower job growth in recent months. If the economy continues to grow below trend, as was clearly the case in the third quarter (real GDP up only 1.6%), monthly gains will continue to disappoint in coming months, and the job market will slacken."(snip)
--- in other words, when it comes to the true state of the US economy, believe what your own eyes and ears tell you !
~




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