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Old 02-25-2010, 08:13 AM   #61
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There has been no recovery, things are just not getting worse as fast as they were...

Sure you can say your stock portfolio and the banks are in better shape for now...

But are the majority of people really in better shape

Do you trust the government to make it all better

The Bears will be coming out of hibernation soon and they are gonna be hungry...
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Old 02-25-2010, 08:14 AM   #62
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The difference between the bulls and the bears is that the bulls tend to talk about what they *think* will happen and the bears tend to talk about what they *know* will happen...
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Old 02-25-2010, 08:40 AM   #63
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I also agree that 5% unemployment rate is long gone. Employers are and will do almost anything to keep costs down - and the biggest cost is payroll. Employers also do not like the uncertainty in the way that the gov't is affecting employee benefits (health care, SS, taxes). Why hire more people if you don't have a clue know what the total costs will be? I see most companies tweaking their current workforces to make them productive enough to meet anticipated demand.

I saw a big decrease in spending in 2008 -2009. Restaurants, stores, auto dealers, etc. The 10% (probably much greater) unemployed were and still are spending very little. The others reduced their spending because their pay was cut, or their portfolios tanked, or their jobs were in jeopardy. People have become accustomed to living on less, and its going to be a long time before they spend the way they used to. Baby boomers retiring in record numbers are further reducing spending.

This recovery is going to take a long time - perhaps decades
This post made me shiver a bit, because it is exactly how I really feel but have been reluctant to admit. I fear you are correct.
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Old 02-25-2010, 09:01 AM   #64
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I know Id like to sell my house this spring and get the heck out of the Chicago suburbs...

I bought it on 01-01-2000, after 10 years I might break even after paying the realtor...

One thing I have noticed is there are more older people working part time jobs around here at the home improvement and grocery stores.
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Old 02-25-2010, 09:16 AM   #65
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Whatever recovery there is, there is no cash flow at the state or government level to pay for the services they are providing. This really indicates that 2010 may be the year of really significant cutbacks in govermental jobs.

The state of Illinois has been surviving by accounting and cash flow chicanery - they owe grade schools through 12th grade in the state over 700 million in payments they deferred and an equal amount to public universities, while the outlook for inflow of cash in 2010 is down 900 million. This is a situation which cannot last, in any situation cash is king (just ask Warren Buffet in September 2008). Illinois, New Jersey and California are the states in the worse situation, but these pressures are all over the US and the European union there is not enough cash. The fact this is occuring at the same time unfunded pension requirements due only adds the situation of far too many public debt bills and too little income.
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Old 02-25-2010, 09:18 AM   #66
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I know this is a thread about anecdotal evidence, but the financial/economic blogs I read have been full of interesting data recently; lotsa bad, not much good.

The good:
Calculated Risk: ATA Truck Tonnage Index increases in January

The bad
Calculated Risk: Weekly Initial Unemployment Claims Increase to 496,000

Calculated Risk: New Home Sales fall to Record Low in January

The Big Picture Blog Archive Bracing for a Wave of Bank Failures

The Big Picture Blog Archive What Happens When Consumer Confidence Falls 10-Points?

Unclear:
Calculated Risk: Case Shiller House Price Graphs for December
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Old 02-25-2010, 09:20 AM   #67
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Whatever recovery there is, there is no cash flow at the state or government level to pay for the services they are providing. This really indicates that 2010 may be the year of really significant cutbacks in govermental jobs.
This may be what triggers the second wave, assuming governments have the guts to make the hard but necessary choices to get overall labor costs under control -- not so much wages, but more so the unfunded and underfunded liability for future retirement benefits.

Immediately eliminating DB pension plans and retiree health insurance for new hires in many occupations would be a good start. That would probably reduce the need for pink slips and drastic cuts to existing retirement promises, and new hires would know the deal before they agree to work for that governmental entity.

As an aside, one thing of note is that almost every report of new weekly unemployment claims has come in higher than expected. That suggests to me that the markets are still overstating the potential for this recovery, one which is not sustainable unless net gains in jobs start trickling back in.
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Old 02-25-2010, 09:24 AM   #68
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The difference between the bulls and the bears is that the bulls tend to talk about what they *think* will happen and the bears tend to talk about what they *know* will happen...
This might be true, but I've also found that Bulls talk about what they hope will happen, and Bears talk about what ought to happen.
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Old 02-25-2010, 09:26 AM   #69
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...and Bears talk about what ought to happen.
As if they are hoping for the worst?
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Old 02-25-2010, 09:33 AM   #70
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Good, Bad? You decide:

Calculated Risk: Fed's Pianalto: "May take years to get back to 2007 level of output"

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Some of you may think I am being too pessimistic. After all, we saw a strong GDP growth estimate for the fourth quarter of last year--nearly 6 percent at an annual rate. But I think that figure overstates the underlying strength of our economy right now.
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Old 02-25-2010, 09:35 AM   #71
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This might be true, but I've also found that Bulls talk about what they hope will happen, and Bears talk about what ought to happen.
So the bears are realists grounded in macroeconomic facts and the bulls are reality-impaired and clinging to outdated expectations about long-term market performance?

Yes, a lot of people ridiculed the bears in 2007 and they were vindicated -- and mostly right. But in some cases it feels like hubris has set in as a result. Elaine Garzarelli was famous for "calling" the 1987 crash, but it's not like her subsequent record was very inspiring...

The market will do what it will do.
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Old 02-25-2010, 09:40 AM   #72
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There does seem to be more job postings for manufacturing/warehouse jobs around here paying $8-10 an hour...
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Old 02-25-2010, 10:02 AM   #73
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In my industry (engineering consulting), it is really a mixed bag. Volatile describes the labor market better than good or bad. Lots of folks are jumping ship from unsuccessful firms to firms that are booming and expanding. Some folks are trying to get into higher paying cushy government jobs. Most firms seem to be back to keeping all their remaining staff pretty busy.

Job postings are way up in general for these consulting engineering jobs in the last few months. In my particular sub-sub specialty, I have not seen a lot though.

After a few rounds of layoffs, benefits being completely removed, and salaries being slashed across the board, it was calm for a while here at my employer. Then in October, employees started leaving in droves for better jobs with benefits and more pay. So far about a quarter of the company has left and found better jobs. However we have not had a problem filling those positions with seemingly decent employees (with a few exceptions). About half of the vacant positions have been filled at this point. It is still really hard to find engineers to fill one of the spots we have vacant, and I see a lot of job postings for this type of sub-sub specialty, which probably go unfilled. Another huge hiring area right now is rail engineering. Our state just got a ton of High Speed Rail funding (go stimulus spending lol), and it seems like every firm out there is trying to bring on a few rail engineers to ramp up their railway engineering departments that are currently non-existent. Many of these hires will be out of state I assume since our local talent pool is pretty shallow in that area.

DW works for an investment bank, and let's just say that the raises, bonuses, and profit sharing contributions in early 2010 have been very very generous (yes our family is evil banker). 15%+ raises and bonuses. She's not on Wall Street, but deals with traders who are there and at other major exchanges around the world.
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Old 02-25-2010, 10:48 AM   #74
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In Idaho the state is now making significant cuts. My department is taking an additional 7% on top of earlier cuts this year. They've also instituted furloughs. I suspect lay-offs and office closures will be announced in a week or two. Washington is having similar problems.

But state gov't isn't an economic indicator. It trails the economy. I.E. if the states economy tanks tax receipts go down, which means that in 6 months the state government will also tank. If the state economy goes up tax receipts will also go up, and the state government will see an improved budget.

With that said, other antecdotal indicators in my area appear healthier than a year ago. Fewer business closures, even some openings. Restaurants seem to be filling. Houses are slowly selling.


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Whatever recovery there is, there is no cash flow at the state or government level to pay for the services they are providing. This really indicates that 2010 may be the year of really significant cutbacks in govermental jobs.

The state of Illinois has been surviving by accounting and cash flow chicanery - they owe grade schools through 12th grade in the state over 700 million in payments they deferred and an equal amount to public universities, while the outlook for inflow of cash in 2010 is down 900 million. This is a situation which cannot last, in any situation cash is king (just ask Warren Buffet in September 2008). Illinois, New Jersey and California are the states in the worse situation, but these pressures are all over the US and the European union there is not enough cash. The fact this is occuring at the same time unfunded pension requirements due only adds the situation of far too many public debt bills and too little income.
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Old 02-25-2010, 10:54 AM   #75
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In Idaho the state is now making significant cuts. My department is taking an additional 7% on top of earlier cuts this year. They've also instituted furloughs. I suspect lay-offs and office closures will be announced in a week or two. Washington is having similar problems.
The problem is that these governments are treating symptoms that are largely unrelated to the cure. The real culprit for many state and local government is the ongoing (and worsening) problem with current and future liability for retirement benefits already promised (and often guaranteed by law). Laying people off, adding unpaid furloughs and cutting base pay are an immediate-term fix that does little or nothing to resolve the longer-term underlying problem -- ongoing public employee retirement obligations, including many places where new hires are still getting the same retirement deal that has already gotten these governments in real financial trouble.
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Old 02-25-2010, 11:26 AM   #76
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The problem is that these governments are treating symptoms that are largely unrelated to the cure. The real culprit for many state and local government is the ongoing (and worsening) problem with current and future liability for retirement benefits already promised (and often guaranteed by law). Laying people off, adding unpaid furloughs and cutting base pay are an immediate-term fix that does little or nothing to resolve the longer-term underlying problem -- ongoing public employee retirement obligations, including many places where new hires are still getting the same retirement deal that has already gotten these governments in real financial trouble.
Agreed-somewhat! State departments are doing what they can by instituting furloughs, closures, etc. given budgetary limits provided by the legislature. It takes an act of the legislature to make the changes you suggest. And that is a tough call-politically and morally.
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Old 02-25-2010, 11:32 AM   #77
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It takes an act of the legislature to make the changes you suggest. And that is a tough call-politically and morally.
Agreed where existing promises to current employees and retirees are concerned, but it shouldn't be *that* tough to merely change it for future new hires. Beyond that, yeah, you have real tough political and ethical sledding. Seems like they should still go for the "low hanging fruit" with respect to new hires, though. As I said before, that might help "save" the promises already made and help reduce the layoffs and pay cuts that threaten to undermine the recovery -- and give us more cost-certainty with a pay-as-you-go compensation model.
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Old 02-25-2010, 11:57 AM   #78
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Agreed where existing promises to current employees and retirees are concerned, but it shouldn't be *that* tough to merely change it for future new hires. Beyond that, yeah, you have real tough political and ethical sledding. Seems like they should still go for the "low hanging fruit" with respect to new hires, though. As I said before, that might help "save" the promises already made and help reduce the layoffs and pay cuts that threaten to undermine the recovery -- and give us more cost-certainty with a pay-as-you-go compensation model.
I agree that cutting benefits for new hires is an easy decision. There is a small political dimension, and no moral problem. A simple business decision. Much tougher sledding (I like that phrase-thanks) for current employees and retirees. I've been involved in the decision making process when it involves current staff benefit cuts. A simple business decision is not nearly such a simple moral (or morale!) decision in that case.

One could have an interesting discussion whether cutting pensions for retirees would benefit the department at the cost of the overall state. I.E. the department realizes a cost savings. But, due to their reduced economic well-being said retirees now create an even larger drag on the state because of their decreased spending power, and increased use of state resources in the form of welfare, medicare, food stamps, etc.
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Old 02-25-2010, 12:45 PM   #79
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Agreed where existing promises to current employees and retirees are concerned, but it shouldn't be *that* tough to merely change it for future new hires. Beyond that, yeah, you have real tough political and ethical sledding. Seems like they should still go for the "low hanging fruit" with respect to new hires, though. As I said before, that might help "save" the promises already made and help reduce the layoffs and pay cuts that threaten to undermine the recovery -- and give us more cost-certainty with a pay-as-you-go compensation model.
I don't see how these states are going to ever possibly meet their obligations, it is a fantasy that is going to end in bancruptcy of the states. Illinois was issuing billions in bonds to invest in the pension funds in the stock market, amounts that have a very current turnaround and resulted in losses and a present unfunded liability of 61 billion. It has not worked out well for the state. With Illinois owing 130 billion they do not have the cash to maintain the illusion they have created. This pension liability is not something that has historically existed in states in great times of stress. The retirees with inflation adjusted pensions from states like Illinois will find their retirement may not be very secure. Terry Savage wrote a very good column in the Chicago Sun-Times explaining the problem:

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Several pension reform proposals have been presented to the Illinois Legislature. Even the most gentle reforms would require the state to make additional annual pension contributions of more than $12 billion every year. Simply cutting benefits for current or future retirees comes nowhere near to solving the problem
Emperor has no clothes: Pensions are short cash :: CHICAGO SUN-TIMES :: Terry Savage
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Old 02-25-2010, 01:05 PM   #80
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Undoubtedly the states will need to make changes. Businesses figured out they couldn't offer these packages about 20 years ago. Gov't will need to realize the same thing.
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