(Dec. 18, 2013 --12:45 PM Pacific Standard Time - Las Vegas)
It appears that the news of permanent long-term unemployment is helping to
drive stocks higher --- when an over-saturated labor market, with depressed
wages, is helping to increase corporate earnings.
Over the course of a few minutes, while the soon-to-be outgoing Fed Chairman Ben Bernanke was
speaking at a news conference today (televised on CNBC), the stock market took off and went viral
--- on the way to another record high.
But how can that be with his announcement of the tapering of QE? (from $85 billion to $75 billion a month)
Bernanke had also acknowledged that there is still a big problem with the long-term unemployed and a falling labor participation rate --- and he also said it was because of both demographic (for which I disagree) and structural reasons (for which I agree) --- and because of "discouraged workers" (for which I also agree), and not because of a temporary business trend.
On the contrary --- businesses see pots of gold ahead.
Talking heads on CNBC had said that corporate earnings reports were "positive" and was most likely the main reason why stocks were taking off --- and that the trend was expected to continue into next year.
That makes sense, because commercial banks haven't been lending all that much (hoarded in Treasury bonds) and corporations have also been hoarding (much of their profits untaxed in offshore accounts from overseas earnings).
So this unemployment thing might be a permanent situation. I guess that the more people out of work (and the longer that they are unemployed), the better for corporate earnings and the stock market.
Hail to the top 1% and their capital gains and low tax rates...inequality marches on! (The DOW closed at 16, 127)
Ben Bernanke's last day is on January 31, 2014 --- this is how the Washington Post will remember him.
Fed Expects Further Decline in Labor Force
http://bud-meyers.blogspot.com/2013/12/fed-expects-further-decline-in-labor.html
Discouraged Workers, not Disabled, Shrinking the Labor Force
http://bud-meyers.blogspot.com/2013/12/discouraged-workers-not-disabled.htmlThe Great Quantitative Easing Scam
http://bud-meyers.blogspot.com/2013/12/the-great-quantitative-easing-scam.html
Only the new Fed Chairwoman (Janice Yellen) and Progressive Democrats can save our collective asses now.
ReplyDeleteThe Guardian -
ReplyDelete"Long-term unemployment is currently at twice or more than the level at which federal benefits have been eliminated in any of the previous recessions since 1959. America is a much richer nation today, but not kinder or gentler to the unemployed. Our government is still trying to reduce economic growth and employment while we have more than 20 million people unemployed or underemployed is testimony to the unbridled power of the special interests that dominate debate over economic policy in the United States."
http://www.theguardian.com/commentisfree/2013/dec/18/us-budget-deal-good-bad-stupid