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Some Economic Reality As You Ring In The New Year

31 December 2009 No Comment

Running through some of the recent headlines…

Unemployment Picture

Today, we had glee from reporters that the initial unemployment claims dropped.  As Zerohedge reports (and continuously reports), nobody is reporting on the huge spike in EUC claims which are Emergency Unemployment Compensation.  Sure, new initial claims might be slowing, but the emergency claims are spiking showing that more and more people are staying unemployed longer and longer.  Not necessarily a sign of a booming economy.

Bailouts Continue…

On Christmas Eve, we learned that the government is writing a blank check to cover losses at Freddie and Fannie through 2012.  This was to show a sign of confidence as the losses continue to mount.  Yep, housing is definitely recovering (sarcasm).

This week, GMAC got additional bailout money to the tune of 3.5-3.8 billion dollars.  GMAC is one of several institutions to get several rounds of bailout money as their flawed business plan continues to mount staggering losses.

If bailouts peaked at the height of the economic crisis, shouldn’t they basically be nonexistant at the height of recovery?  If you agree with that, then where do the continued bailouts hint at our current place on the road to recovery?  I remain skeptical…

As you ring in the new year, focus on your own finances, your own performance at work, and your own businesses.  Ignore the nonsense that the mainstream media continues to feed us regarding green shoots and our fantastic economy.  What will they hang their hats on if the stock market corrects?  Or crashes?  Stick to your gameplan and remain skeptical.

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  • Josh said:

    There is no such thing as a Jobless Recovery. The talking heads are ecstatic that unemployment claims have dropped and company profits are up, but they turn a blind eye to EUC claims rising and unemployment not going down. The reason is glaringly obvious. Companies across the board spent 2009 cutting labor to the bone, but now they have run out of people to cut without disrupting profits. There is no one left to fire without impacting their business or shutting down aspects of their business. Unemployment will remain static for awhile until companies are forced to trim down their business to their core interests which this process will probably begin middle of 2010. No one is spending other than the government. One in Ten is without a job and the other nine are terrified they are next.