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THE BLUE MONEY REPORT.
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The Blue Money Report
"Money clarifies one's speech greatly, while no one listens to the poor."
~ Chinese proverb.
Welcome to the Blue Money Report
Today's Commentary: 10.08.02 An investor, and analyst and an economist are traveling on a train. This train speeds by what looks like a black sheep standing in profile. The conversation turns to what they had just seen. The investor concludes that all sheep are black. The analyst tries to be analytical and suggested that some of the sheep are black. The economist points out the existence of at least one sheep, and at least one half of that sheep is black.
They are all looking at the same object but they see it in different ways. Why do you suppose this is? Are investors inclined to see things in such a conclusive way because eventually they have to make up their minds, one way or another, right or wrong?
Do analysts try to be political about what they observe because the agenda they work under is neither clear nor concise? It is merely a state of recommend or not, buy or sell.
And is the economist inclined to offer an opinion that is both based in science and observation, but like a running stream... moving and changing, but always appearing the same?
Part of the problem with investing in any market is our overall view of what is happening. And who can get a firm grip on that? With each new number that is posted, there is a contrary number that tends to debunk the previous one. But some numbers, and even some views of the sheep are becoming quite clear as a market problem.
Unemployment is a problem. It is not the same problem it was in the eighties, but for an age when the economy is more dependent on the worker to spend, too many unemployed creates an imbalance. So where is the growth that the economy needs so badly? It can't come a working age population that has seen jobs disappear faster than any previous group since the end of WW II.
Too often we have heard that the consumer is the backbone of this economy, but the consumer is quickly approaching tapped. To the investor, the number of unemployed is clearly too many. This observation is inaccurate but those inaccuracies are irrelevant. In 1981-82, there were twice as many people unemployed as there are now according to labor statistics. To all of those who observe that all the sheep are black no matter if the unemployment number is not as high as it was, see no ability for the economy in the near term to replace those jobs with anything better than temp jobs (which increased) and service jobs (which also increased). These types of jobs do not replace income lost but simply replace a numerical job for a job.
Our old friends the analysts see the economy in the most positive light possible but have had to make some optical adjustments along the way. Sure they were optimistic about growth when there was no earnings. They were optimistic about revenues when they did little to offset the growing debt. But they failed to notice that some of the sheep that were not paying attention to their observation. There are more folks available to work. If this is the case, analysts have been having a difficult time seeing what any change in unemployment really means. With sympathies to those that remain unemployed, those that have had no choice but to find work at lesser pay in industries unrelated to the ones they were previously employed in, has shown a small increase over the last five months.
To our favorite economists, this clearly signals a chance for an increase in payroll, a strength that they see as a positive indicator. What we perceive as a recession is not even close to what it really is. Work it seems, is work. Although service industry jobs and temp work do not provide for the worker the same amount of monetary or mental satisfaction, it does beat collecting a check for doing nothing. But most economist would fail to factor in the reality of this return to the workforce. Unemployment benefits are running out for those that have been unemployed for the longest time. But this is the problem of only the sheep who are half black.
I understand that there is good reason to fix the terror problem and the President seems to be concentrating all of his efforts on it. But at the exclusion of what is happening here at home, it all seems a bit less important when a world without Saddam is still a world without work for many folks.
Three things would fix this problem for the short term without any long term permanent repercussions on the economy, the deficit or the war effort. Extend the benefits to those that need them. Allow folks to work at those part time service jobs without eliminating the benefits altogether. Earning is spending. Spending is growth. Growth is recovery. And if there was ever a need for tax relief, not taxing unemployment benefits would win this president all the support he would need from the people who have begun to feel like the economic black sheep.
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