In his morning note, David Rosenberg warns of more economic bloodletting ahead.
The article in yesterday’s WSJ titled Specter of Layoffs Stalks Wall Street really resonated with us. As we said in yesterday’s note, the size of the securitized loan market has shrunk 60% in the past two years. Balance sheets, production, order books and staffing requirements are all rightsizing to this new semi- permanent landscape of reduced credit availability.
In fact, we could see a situation where another 4 to 5 million jobs could be shed in the United States — and in the three sectors that were, and remain, the most affected by the housing crisis and financial collapse.
For example, historically, the construction industry employed three workers for every housing start. Today, that ratio is closer to 10. This could easily mean that we see 3 to 4 million construction jobs being lost going forward, barring a major revival in the housing market, which isn’t happening.
The ratio of employees in the financial sector to outstanding private sector credit is at a new and lower level that would warrant around a workforce 500,000 lower than is the case today — just to get to productivity ratios that prevailed in the pre-bubble era. And the third sector, which is the fiscally-challenged state and local government segment, for payrolls there to mean revert to the level commensurate with the ever-declining level of public spending would also mean roughly 500,000 employment cutbacks. No doubt there are other sectors that will provide some offset in health and education and even manufacturing, but it took 25 years for these areas combined to rise five million and something tells us that the downsizing that is left in the housing, financial and state/local government sectors will occur in a much shorter period (and the latter too, if what happened recently in New Jersey is any indication, the social contract with public sector unions will soon go the way of the dodo bird)."
In fact, we could see a situation where another 4 to 5 million jobs could be shed in the United States — and in the three sectors that were, and remain, the most affected by the housing crisis and financial collapse.
For example, historically, the construction industry employed three workers for every housing start. Today, that ratio is closer to 10. This could easily mean that we see 3 to 4 million construction jobs being lost going forward, barring a major revival in the housing market, which isn’t happening.
The ratio of employees in the financial sector to outstanding private sector credit is at a new and lower level that would warrant around a workforce 500,000 lower than is the case today — just to get to productivity ratios that prevailed in the pre-bubble era. And the third sector, which is the fiscally-challenged state and local government segment, for payrolls there to mean revert to the level commensurate with the ever-declining level of public spending would also mean roughly 500,000 employment cutbacks. No doubt there are other sectors that will provide some offset in health and education and even manufacturing, but it took 25 years for these areas combined to rise five million and something tells us that the downsizing that is left in the housing, financial and state/local government sectors will occur in a much shorter period (and the latter too, if what happened recently in New Jersey is any indication, the social contract with public sector unions will soon go the way of the dodo bird)."
Read more: Here..
where is the Aug. 25 guy? i'm waiting for tomorrow.
ReplyDeleteYeah!
ReplyDeleteme too!
ReplyDeleteit is the Hidenberge Omen thing. check out Zerohedge.com
ReplyDeleteWe are in a Depression, regardless of what big brother tells you!
ReplyDeleteIf the great depression is so, 62 million homes could be lost at the end of the year.If Oboma dose not see a way out of this mess created by are own capitalist system that favors the few,then we are all scrude!DON'T BE STUPID ABOUT IT,REVOLT!!!!....
ReplyDeleteThe important thing is that we saved the TBTF banks and the bankers are still getting a big fat bonus!
ReplyDeleteIt's no surprise when someone has been on the job for say 6 months and then they get the "we have to let you go" speech. It happens every day in this country.
ReplyDeleteMy brother just lost his job. He had worked there for 33 years. He was not alone, there were 40+ year workers who got the boot as well. This folks, is a really bad sign.
Might as well check out the "The Siege", that Bruce Willis film about martial law and racial profiling and confining Americans of all flavors to fenced in cages in stadiums, treating them like cattle. Ask yourself if you are ready to survive on your own, or join the others on your way to your assigned FEMA camp.
There is no way out of this economic disaster. Obozo has no plan.
I myself have seen the future,
ReplyDeleteI know lots of you will scoff but listen.
What is more necessary than a car? Not much, right? One of the problems with the system today is that they are too big, but everybody will have to downsize or the little guy will get smashed.
And there is no more basic furniture than a chair, right?
And what if we could throw in a roof, a fridge and a toilet.
The ultimate invention. It will save our jobs. It will restore the economy. And give the poor a leg up.
All for under $4ooo dollars.
See our ads this week in all large publications.
Look for it under the logo of the Golden Pyrimid.
The Shithousemobile. Haven't you always wanted one?
The Hindergerg Omen occured already on the 12th of August.
ReplyDeleteYou guys, umm...
ReplyDeletePeople are mentally so far gone in this country, words can barely express. The amount of examples I could formulate is very much irrelevant. What I am seeing everyday is bewildering and execrable - but paradoxically comical.
At the time of writing this I got through witnessing just a minor, isolated case exemplifying the utter loss of any basic comprehension of reality. The dimming of intelligence notwithstanding. The "American" people are in a saturation of delusion. Even elementary senses, the basic essentials of functioning, have been devoured and thrown into disarray.
I'm emotionally staggered whenever I think about this. There is no awakening, no revolution, no comeback, no recovery, no improvement, no revival, no revelation... there will be nothing good coming. Everyday people in this once awesome nation have become practical invalids. Mindless, ill disciplined, lazy, insecure, neurotic, and absent of any substance remotely resembling integrity.
Floods of people who are literally the same in most behavior, debilitated so much they can't see past their own hand. People with degrees today are as academically rusted as people without. Floods of people all doing the same exact thing and producing the same exact results - TRASH! Few professionals have any real qualifications (applied skill), we are surrounded by incompetence.
I hate to upset any (true) patriots, hard workers, or scholastic brains, kudos to those who understand what I'm pointing to. We've crossed the point of no return.
Reality Shows, VH1, rap, porn, destruction of the family unit, Hollywood, Socialist hijacking of school curriculum, youtube, lack of parenting, fast food, material greed, group trophies, drugs, and other methods of terminating the thinking individual have payed off. A stellar output!
The United States is one for the histories. Get out now if you have the money... erm, that would be an oxymoron at this point. The people with money and brains would have already left.
3:02 that comment just about says it!
ReplyDeleteDuh! If people don't have jobs you can't have hyper-inflation.
ReplyDeleteThat is the mechanism for too many dollars chasing too many goods.
Well, inflation is already here and has been for a while--but the media ignores it. At the start of everything falling apart, about two years ago, the pet food I buy suddenly went up 40%. Aside from losing a home, it's one of the reasons so many people gave up their pets.
ReplyDeleteThen I noticed that other prices were shooting up. Two winters ago, a kerosene heater was $100. Last winter the same heater was $140. The price of candy and cereal stayed the same, but the packages were 1/3 smaller in size. In January sugar went up by 30%. Today it went up another 15%.
I read the article on hyperinflation. The author thinks that people will still buy outrageously expensive items because they'll have no choice. Or that we'll still pay as much as $7 for a gallon of gas. But you can't buy it if you don't have the money. And if you do buy that gas, you won't have money for other things. So the consumer economy is dead, manufacturing is outsourced, service jobs are also outsourced, and the only thing left will be to start yet another war to give unemployed people something to do....