give me a chance to survive
I'm just a poor soul in the unemployment line
my god, I'm hardly alive
my mother and father, my wife and my friends
You see them laugh in my face
But I've got the power, and I've got the will
I'm not a charity case
Ouch, that was a horrible jobs report. The headline is a gain of just 18,000 jobs versus expectations of 125,000 (and whispers higher), and an unemployment rate that ticked up to 9.2%. Payrolls for May were also ratcheted down from 54,000 to 25,000. More troubling was that the broad measure of unemployment, U-6 which includes discouraged and marginally employed surged from 15.8% to 16.2%.
In the past, the market might actually be inclined to rally after such abysmal economic numbers. The assumption would be that the Fed or Congress would come riding to the rescue, (via rate cuts, tax cuts, injections of stimulus, etc.) to stimulate the moribund economy. It appears there is little hope of that today. After trillions in "shovel ready" stimulus, interest rates grounded at zero, QE1, QE2, QE2.5, and a totally inept/dysfunctional Washington DC, investors aren't expecting a white knight to save the day.
Wow, just think the recession has been over for more than two years now!
The next couple of weeks the headlines will be full of how Washington is going to manage to lift the debt ceiling while lowering the deficit. Admirable goals indeed, I only hope that the spending cuts will entail cutting deeply into the regulatory morass that stifles business growth and job creation. A man can hope, can't he?
The SGS (Shadow Government Stats) Alternate Unemployment Rate reflects current unemployment adjusted to include long-term discouraged workers, who were defined out of official existence in 1994.
Mr. Market actually took the jobs numbers relatively in stride. While the S&P 500 was down 0.70% on the day, it is still up 6% since June 23. Second quarter earnings season starts next week and the expectations continue to be that corporations are finding ways to keep growing in spite of (or because of) the weak labor market. Profit margins have been at record highs for the last several quarters and that is expected to continue.
Most of our equity and commodity indicators are still in the neutral camp, and our cash levels are around 22%.
Capitalism (at least as practiced today) Is Sick:
As the above charts so clearly show, something in America is wrong. This Great recession (which ended two years ago), is a reflection of a far bigger problem/sickness. What's the problem? Not our economy, not our markets, not even our politics. While our economic pains are very real they are just symptoms of a far greater problem. No, something structural is wrong. I'm not sure when it started (maybe around 2000, maybe long ago), but our capitalistic system has been under assault by greed, deceit, stupidity, corruption, unethical behavior, and a total lack of a moral conscience.
The problem with capitalism in America today is that we have lost our moral compass. And without it we lose a bit of our soul.
During the Fourth of July weekend I read a bit about Brigadier General Henry Knox. After his service in helping defeat the British, his good friend George Washington appointed him Secretary of War. While his military achievements were many, what impressed me most were his views on debt, solvency, and responsibility. In short the story goes something like this. After the British soldiers looted and ransacked his bookstore in Boston, he still decided to make full payment of 1000 pounds to a London-based printer who had sent him a shipment that he never received. It was simply a matter of principle. Wouldn't it be nice if some of our elected officials still had those kind of principles?
Another interesting story about responsibility comes from Pittsburgh's own Henry J. Heinz. In 1875 Henry was a partner in Heinz, Noble & Company, one of the nations leading produce processing company's. But in 1875 they had a national bank panic, a bumper crop that depressed prices, and by December Heinz & Noble filed for bankruptcy. The Heinz family lost everything, money, friends, and reputation, but what they didn't lose was character. You see, in bankruptcy your debts are discharged, but Henry Heinz was so distraught that he kept a journal of everyone and every penny he owed. It took him years, but while starting F. & J. Heinz and Company in 1876 Henry eventually paid back every debt he had ever incurred. He didn't have too, but it was simply a matter of principle.
We didn't get sick over night, and it will take a long time to heal, but I believe that we can. It's easy to say that we need corporate and political leaders with a moral compass, but I think it all starts with us. We have to rise above this ethical morass before we will find leaders who will do the same. Capitalism is not inherently evil, capitalism creates jobs, wealth, and raises our standard of living. What is evil is those that seek personal gain at the expense of others.
I know that's a lot of soap-boxing, but until we find a way to shift responsibility back to the individual the patient will continue weakening.
Summertime, And The Living Is Easy:
Summertime is the time to embrace idleness. Idleness is so very important, but in today's hyper connected world it is also so very scarce. You see, ideas come from idleness, they come from down-time, from the deep recesses of our subconscious. Sometimes you need to daydream, just let your mind get up and wander around and see what it might find. It is very hard to be creative, to see the forest from the trees, if we're running around all day ticking things off our to-do-lists, making phone calls, texting, tweeting, etc.
I plan on practicing what I preach over the next several weeks...idleness.