Let me begin by saying- there is no such thing. I could think of a few oxymorons to go along with this idea; Larger half Almost exactly Genuine imitation Unbiased opinion Exact Estimate LOL!
Since this “jobless recovery” is tied to the rallying stock market and housing sector, let’s begin by analyzing the cause of the recent stock market rally. What is fueling the stock market and causing the rally? One idea that stands out above all others has to do with the unemployment numbers. Media tries to put a positive spin on unemployment figures claiming the RATE of new unemployment claims is decreasing. Here is a possible explanation:
The largest expense any company incurs is labor. As laborers are let go, the expense of salaries and benefits is reduced thus improving the company’s profits. So naturally, the stock market which trades on future earnings is rallying to catch these earnings. This is a double edged sword. What will companies do once their labor force is reduced to a skeletal level? At some point new products must be invented and manufactured… Your guess is as good as mine for predicting that date.
The Housing market; is being legislatively propped up by federal and local governments. The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. It also authorized a tax credit of up to $6,500 for qualified repeat home buyers.
Mortgage Problem: A new law does not cover many mortgages that are “investor owned.” This excludes many homeowners whose mortgages were securitized. This refers to mortgages packaged into securities which were purchased all over the world. In short, these bundled mortgages are governed by contracts specifying what the servicer can and cannot do with the bundle. If renegotiating the mortgage would be contrary to that contract, California’s new protection will not apply. Additionally, recent rulings have mandated that the note holders be present for foreclosure hearings- how do you assemble fractional note holders from all over the world? This seems like a job creation opportunity!
Up to this point the conversation is focused on cutting expenses and government incentives. Since our RATE of unemployment has slowed-perhaps we can see “the bottom” of this recession?! The only sustainable exit from a recession is via JOBS- jobs that are long lasting and provide the ECONOMIC CONFIDENCE to our consumers. As consumers gain economic confidence, small businesses are formed, retail purchases increase, consumers have disposable income and the economy expands.
The Employment Development Department of California reports that Unemployment is down to 12.2% and the number of people unemployed in California was 2,247,000 – down by 13,000 over the month Oct 2009, but up by 799,000 compared with September of last year.
How will the existing 2,247,000 unemployed folks find work? How can economic confidence be restored without these workers? I look forward to your comments and feedback.
To learn more about my background, visit Consult Pete. To learn more about my company services, visit Commercial MasterMinds. I can be reached via email at Pete@CommercialMasterMinds.com or just call (925) 719-3569
Continued Success, Pete
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