Fed Warns Unemployment May Double Great Depression
by Chriss W. StreetI warned last week that a recession and higher unemployment were about to hit the U.S. economy. On Tuesday, the Bureau of Economic Analysis cut their estimate of growth in the third quarter ending September from 2.5% to 2%. Then on Wednesday, the Federal Reserve rocked financial markets by forcing America’s 31 largest U.S. banks to “stress test” balance sheets to determine their capability to withstand an 8% drop in the economy; which would cause home prices to plunge by 21%, and unemployment rate to jump to 13%.
I illuminated in my report that U.S. Bureau of Labor Statistics has been under-counting unemployment by at least 2%. For a nation reporting 154.4 million workers; this means the 13.9 million reportedly unemployed should actually be 17 million. Given only 12.8 million were unemployed at the 1933 peak of the Great Depression, when the undercounting and the Fed’s stress test are added the total is 23.2 million unemployed; almost double the Great Depression.
Formerly bullish top bank analyst Dick Bove in an Bloomberg interview commented on the Fed:
“By taking these draconian views of what could happen in the market, if they in fact force the banks to defense themselves against the outlook that they’ve put up, they’ll cause a recession,”
Consistent with my prediction that the booming production of capital goods would fall hard next year after the expiration of the 100% “bonus depreciation” tax credit; the bad news parade picked up steam this week with reports that U.S. durable goods orders fell 0.7 percent last month and initial jobless claims came in higher than Wall Street analyst’s predictions.
On the always dismal European front, interest rates on German “Bund” Treasury Bonds exceeded the interest rates on U.S. Treasury bonds for the first time as traders feared the financial turmoil of Portugal, Italy, Greece, and Spain (aka the “PIGS”) is causing a financial contagion that may implode solvency of German banks. Peter Cecchini, head of investment strategy at Cantor Fitzgerald in New York reporting on effects of the European financial crisis for the rest of the world: “Evidence is slowly mounting that containment is a pipe dream,”
In the delightful Middle East, the Aircraft Carrier George H.W. Bush left its traditional theater of operations watching Iran and the Persian Gulf, and moved to the closest point to Syria in preparation for implementing a “no-fly-zone” by American, European, and Arab League forces. CBS also just reported: “The U.S. Embassy in Damascus urged its citizens in Syria to depart “immediately,” and Turkey’s foreign ministry urged Turkish citizens on pilgrimages to “return home from Saudi Arabia to avoid traveling through Syria.”
During the month of November the equity shares of the 31 banks the Fed directed to begin their stress test have now fallen 13%; with Goldman Sachs and Bank of America trading at their lowest prices since the lows of the Great Recession in March of 2009. If the economy heads for a sharp recession and unemployment leaps, there will be hell to pay for politicians in November’s election.
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Thank you all the success of Chriss Street’s latest book: “The Third Way”; now available on www.amazon.com and available through Barnes & Nobel on November 28. If you would like to order a signed copy contact The Forum Press at: www.theforumpress.com
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168 Comments
I think Obama's only chance at reelection is to campaign FOR the Republican nominee.
Seems to be doing a fine job of it already…
Considering the chronically high unemployment rate, will just one Republican candidate step up and say – cut immigration. And we have at least two candidates, Newt and Perry, who insist on amnesty-which will only increase illegal immigration.
The American workers have been thrown under the bus by both political parties.
This and other great understatements of the century.
The FED is a little late to the party walking in a warning us about the policies over the last 3 years. Where the hell were they in 2006 during the Frank-Dodd days?
Man oh man, I don't sense anything good ahead.If one is seeking employment the qualifications are becoming enormous because so many need work, highly skilled workers I might add, and we are no longer a manufacturing economy,(caused in large part on the unions wage and benefits demands) and the people I know who are attempting to gain new skills in hope of becoming more attractive to employers are hoping they have chosen a field that will be hiring but, just like business' they are suffering from uncertaintly not knowing what destructive path these idiots on the taxpayer dole in Washington D.C will take. Folks these idiots get paid by us and we need to correct the situation. We are paying to LET a bunch of morons ruin this country
More good news brought to you by the human 9/11 and his jihadist administration.
I assume you mean legal immigration — which I also think needs to be cut.
Illegal immigration is a simple matter to fix. All the federal government needs to do is drop the lawsuits with AL, AZ, UT, and on and on…. If illegals can't find work and can't drive then the problem solves it's self rather quickly.
But a better solution, since they have made just about everything else under the sun a felony crime then they should add it the list these two gems and just like everything else — how about 5 year minimum jail time too:
1. False filing of I-9 for both the parties (the potential employee and the employer's representative taking the information)
2. Obtaining, possession and/or use of false government identification.
oh and let's add one more….
Any law enforcement officer who becomes aware of an individual in violation of either measure listed above and fails to apprehend such individuals will be considered accessories to commit same and held to the same standards as if they committed the crime them selves. That this prevision extends to policy makers and management who engage in promulgation of policy with indifference to the above aforementioned.
I would love to see something with teeth reach up and bite Eric Holder in the butt.
The Fed is warning that Unemployment may double?? ……..Well then Obama's master plan, to bankrupt America and convert U.S. into his slaves under Socialism/Communism, is working isn't it?……… Boot his arse out, along with all the rest of the Traitors!
Really? In terms of total manufacturing output we are roughly even with the Chinese. In terms of the value of that output we are also roughly even, but with a slight edge. In terms of what is produced the U.S. manufactures a far greater percentage of "cutting edge" technologies. China makes some sophisticated stuff, but a lot of it is plain old crap that is no longer feasible to make here.
With a government that is actually on the side of the people – aka the side of Capitalism, we would and will wipe the floor with their butts.
Don't drink the "we don't make anything anymore" kool-aide. It is a Leftist trope meant to demoralize us as a nation.
Seems to me that is what he is best at. The Republicans could run an old red dog and win.
I thank you for the encouragment and patriotic attitude, I guess I have been beat down by the pessimism and hopelessness that I forget. It all started about three years ago, maybe it only lasts four years.
Unemployment double of the Great Depression……?
Now, tell me why obama is running for a second term?
This is deliberate action, President Downgrade has been trying to implode the US economy ever since he was a bogus senator voting present on everything that came down the pipe.
Cloward and Piven, just in time for what will very likely be the most fraudulent election in history, equaled only by Adolf Hitler's and Benito Mussolini's rise to power.
He wants a very bloody war in America to take advantage of and he firmly believes we won't fight back against his coming tyranny…
Me too like maybe a strong voter intimidation case, or if he got caught making gun dealers sell illegal weapons to the mexican drug cartels or something like that. That would get the senate and congress mad as hell and they would take strong action to fire him. If only someone could get something on him.
The Fed would know. It's been instrumental in creating unemployment.
I don't share your optimism quite so much, but the old red dog may just give us the best chance to win.
When does China collapse? My bet is ten years or less…
See, this is what happens when you give the keys to a child. Obama is the worst president in history, he isn't qualified, doesn't have the experience, and frankly has proven that he isn't smart enough to handle the job. There is only one word that completely sums up Obama, Pathetic!
The times are right for a Gingrich type,….
if only we can overcome and ignore Newt being Newt.
Obama (peace be upon him) is a fine example of a Harvard education, how much does it cost to be indoctrinated to cause this level of human suffering across the Globe?!
and ….. send an aircraft carrier off the coast of Syria? What's he going to do now, take out Assad and the Syrian leadership to pave the way for a muslim brother takeover to expand the caliphate?!!! jeez,
How many harvard grads does it take to create a rapid global holocaust?
stay tuned, we are getting the answer as we speak.
The world has become very exciting since His Highness took over. I'm waiting for locusts, the seas turning red, the death of every first-born male child….
The stage is set for economic decline, led by Europe, and possibly war (Middle East). And Obama's solution is : tax the rich.
I wrote 6 months ago that China will have the mother of all banking crisis. In the last month, China had to add big cash to their banks. You might enjoy the report.
http://www.chrissstreetandcompany.com/2011/04/chi...
I agree, although I believe he is only the puppet. Ever since he announced he was running for president, I had red flags popping up all over the place telling me he was "groomed" for his position. People with very nefarious plans for our country have put a man with a third-world mindset in office to do things that no "real" American could ever do without being absolutely crushed by their own guilt.
I hope all you people that think Obama is finished, are right.
He seems to have a hard core 40% among labor, the smart ass left, news media and the useful idiots.
The GOP establishment meanwhile seems as inept as ever in refusuing the siren call going running another slice of milk toast, thus alienating their base.
All we need is yet another star struck individual thinking they can make a third party run and win, and our goose is cooked, carved and served.
The only way to save America is to Vote every Democrat (Local, State, and Federal) out of Office.
As long as One Liberal is connected, in any way, to Local, State, or Federal Government the United States of America is doomed to failure.
The one issue only Bachmann is willing to tackle is the border fence. Where it has been properly installed (Yuma, San Diego), illegal border crossings have been stopped dead cold. Unless illegal immigration is ended at the border, illegals will continue to come into the USA for freebees. There will always be businesses and politicians who will obstruct e-verify or other business penalties for hiring illegals. And there will always be liberal states that will welcome the new voters with open arms.
http://www.americanpatrol.com has done a great job on documenting the dismal situation on the wide open mexican border.
Chriss, I have a business partner in Beijing. A couple of years ago, he told me he was selling some of his real estate holdings… the banks were asking for more collateral and references. I think you are correct.
I would only inform you that textiles has disappeared from this country as far as manufacturing is concerned. If I could find some goods made here, I could sell them.
We have a financial crisis of epic proportions and only Mitt is a fixer. It's like having a brain tumor and only one of the 7 surgeons is an actual brain surgeon. Newt will make the problem worse with amnesty. I am appalled at Mitt's previous positions, and the fact that he won't renounce Romneycare…..but expertise is expertise. We are cork-screwing into the ground from 10,000 and only Mitt can pull us out I'm afraid. I don't like it, I wouldn't vote for him under average circumstances, but this is life and death.
China has $5 trillion in cash flow lending with no collateral.
In Irvine, Ca.; 60% of the new home sales last year were to Chinese nationals for cash. The rich and powerful are stashing their wives for when the problem hits.
This will not be pretty!
Mitt who created the Massachusetts-economy-trashing precursor to USA-economy-destroying Obamacare? THAT Mitt Romney? No thanks.
No matter what we do, right or wrong, their is still a very harsh price to pay!
We The People must stop the addiction to spending.
It will hurt, but it must be done.
God have mercie on us.
How about a medium aged tawny dog with three legs?
Yep, I enjoyed that one tremendously, thanks… I will add it to my arsenal of facts that I use to persuade people that China is a paper dragon. My friend onecornpone also likes to point out that the Chinese do not possess the ability to feed themselves even if they halted all exports of food.
If I had written that same article the only change I would have made would have been to substitute "predictable" in place of "ironic" as it relates to their desire to assert greater control over global financial institutions – it is their only hope to forestall the inevitable. The House of Sichuan is truly a house of cards…
- Ayn Rand
Ask Norma Rae where all those textiles jobs went – and why…
With or without a Rolling Rock?
Ok, now I'm seriously thinking of buying gold and a gun!
Is the USS George HW Bush actually station-keeping off the coast of Syria, or is it just in the eastern Med after having transited the Suez Canal on the way back to Norfolk, VA at the end of a (so far) 6 1/2 month first deployment? The timing is right for GHWB (I wonder if they call it "The Lips"?) to just be returning to port at the end of it's scheduled deployment.
You make an excellent point about predictable v. ironic. I my prior life, I was one of the top short sellers in the country. The problem that I learned with fundamental analysis is that people fall completely in love with momentum. If something has trended long enough, it will way over-shoot even if the fundamental story is collapsing.
The Democratic Headquarters all across the Country the morning after the November elections are going to look like the picnic area of Jonestown after the Koolaid Party. Those fools are going to get absolutely slaughtered in the polls. It will be a good thing.
It was more than unions (Norma Rae). The duty rules are rigged when it comes to importing fabrics. If my customers bring in fabrics to cut and sew, the duty can be from 9.8% to 15%. If they bring in goods that are cut and sewn, there is no duty. It started a long time ago.
I agree. It will be ugly.
I would get the gun first.
"For a nation reporting 154.4 million workers; this means the 13.9 million reportedly unemployed should actually be 17 million. Given only 12.8 million were unemployed at the 1933 peak of the Great Depression, when the undercounting and the Fed’s stress test are added the total is 23.2 million unemployed; almost double the Great Depression."
Dishonesty. There were only 123 million people in the US according to the 1930 census, and many fewer in the actual workforce. Far less than 1/2 as many as there are today. Analogy fail.
Of course, "Fed Warns Unemployment May Double Great Depression" is completely false, they did no such thing.
Well, You being an Obama supporter you should know about failure.
The problem is that the left has established a thorough and elaborate network of 'committees' 'councils' and 'panels' some partly-elected, most appointed, that influence every aspect of society.
For example, independent environmental groups have members who are also university employees; as such, they are also members of campus organizations, and get themselves onto some such panel that influences decisions … which ostensibly should be controlled by the public through our elected representatives.
It is the same in terms of education, religion, civil liberties, etc etc.
Communists are ready to grab the reigns of power at the first sign of instability, at every level of government, and in every sphere of life. The definition of Totalitarianism.
Only if she has the Constitutional powers to bite…
And we have a immature spoiled brat as president out trying to play golf and basketball this weekend. You libtards are dumber than a box of rocks.
" Fed Warns Unemployment May Double Great Depression "
No Way. The media hysteria would cause us to collapse into
Civil War II ___ LONG before we even get close to that 2x number.
You don't have to look far for those ' nefarious people ' … the local school board, city and county administrations, and state universities.
My knowledge of economics is somewhat limited, but I have spent a considerable time studying Objectivist philosophy. That is why I would have substituted "predictable" in your very fine article.
The parallels of what is happening today are staggering when juxtaposed to Rand's Atlas Shrugged. Francisco D'Anconia used the "long trend" to sucker his "victims". What it is essentially is bandwagon jumpers not bothering to do thorough, independent and objective analysis for themselves.
Thanks for all the great contributions here – I actually learn useful things from you… Just bookmarked your site too. Odd question: Why two s' in Chriss?
Well. Sarah Palin has been pretty quiet lately …
She made a splash at the last moment three years ago. And she could do it again.
He needs a little more time to finish this country off.
The aircraft carrier is posturing aimed at Israel, NOT Syria or Iran.
There are, whoops, WERE some squirrels that can attest to that. I don't know if I'd want her biting any of those squirrels in Congress, though. I don't think her vaccinations would cover all the diseases she could get from that lot.
I see your point. Best not to risk it…
Let me guess what the democrats will say…. IT'S BUSH'S FAULT!
That's what I keep yelling!
Maybe two words…arsehole.
Well, if there were far fewer (not less, Einstein) than 1/2 as many as there are today, in your words, that would mean the ratio of unemployed now vs. then would be far higher than twice as many. Math fail.
Nice try, though. Personally, I don't really care about the comparison because it's apples and oranges. The worst of the Depression actually occurred during the Roosevelt years, as people and businessmen realized – after FDR's re-election in November 1936 – that HIS nightmare of government interference in daily lives wasn't about to end anytime soon…but despite it all, people believed FDR was trying to make things better. In this current recession, the majority of people are starting to realize Obama doesn't care about what is best for the economy but what is best to implement his Procrustean vision for America.
To a large degree, it is his fault, and the Republicans, but they're all in it together; Democrats and Republicans. It's us against them.
Are you kidding? The media are helping PUSH this. I just saw where last week a columnist for the Washington Post (Ezra Klein) was giving Obama administration officials a briefing about the results of the so-called supercommittee on the budget. It's not the first time, either. I also notice not one word about this article's statements and conclusions have surfaced in the mainstream media, and predict they never will.
…Or, he may be planning to foment civil unrest, and turn the military on American citizens, INSIDE this country. "The worldwide indefinite detention without charge or trial provision is in S. 1867, the National Defense Authorization Act bill, which will be on the Senate floor on Monday." "In support of this harmful bill, Sen. Lindsey Graham (R-S.C.) explained that the bill will basically say in law for the first time that the homeland is part of the battlefield and people can be imprisoned without charge or trial American citizen or not." Yeah, you read that correctly. Think 'enemy combatant' 'Gitmo' treatment for American citizens INSIDE the USA. This is third-world dictator type $#!T! Spread the word, people!
Senators Demand the Military Lock Up American Citizens in a “Battlefield” They Define as Being Right Outside Your Window
Nice link, and good to be aware of, but I suspect it is a trial balloon that will go nowhere. Whenever I read that one chamber is considering controversial legislation and there is no mention of the other chamber I tend to put it on the back burner. I doubt the rank-and-file military member would blindly obey such orders, or if they did it wouldn't likely last long. They are us, after all… Stay vigilant, but don't let them make you paranoid…
"Conisitent with my prediction that the booming production of capital goods would fall hard next year after the expiration of the 100% "bonus depreciation" tax credit, the bad news parade picked up steam this week…"
Yep, all these rabid flat and fair taxers have no damn idea that production, innovation and expansion will come to a standstill if/ when they get their way. Why should producers risk borrowing, or reinvest our profits in a business that will only be taxed to death? I WON'T. I will pay my tax, only repair or innovate when I have no alternative, and sit on my profits, probably investing in more farm-land, in my case. I sure as hell don't want to hold cash in times like these. It is their own ignorance and envy that will starve them when this economy comes to a screeching halt.
Some lessons are hard to learn without suffering through them. They've got it in their head that the tax deductions I am able to take advantage of are unfair to them, and they must have their revenge… Talk about cutting off your nose to spite your face…
The only reason this isn't already classified as the greatest depression is that the left lies about the numbers. People are out of work everywhere. Quality goods are getting harder and harder to find. Food is getting more and more expensive. Half the town is for rent or for sale and going nowhere. We've all lost huge percentages of our life savings.
I still have such a hard time believing that we have Senators that will even consider this kind of Constitution-trampling legislation, which of course, was written in the dark (Obamacare rings a bell). I think you are right about the military – I think they would turn on the true enemy in short order (After all, they've ALL sworn an oath to protect the Constitution from ALL enemies, foreign and DOMESTIC). I'm not a fan of conspiracy theories, but the Obama administration is proof positive that they DO, in fact, exist. If this Udall Amendment erases this insane provision, then some of my creeping 'paranoia' will subside.
Secure the borders..plug insider trading..choke the unions out…drill for oil. Extend tax cuts. Watch how quickly all this corrects it's self!
NPR hypes bad economic news all the time as part of the agitation mission against capitalism.
Of course, they're not going to cover Ezra Klein's advice to the administration. But people hurting, crying, worried, big bad banks and mean corporations leading to pro-longed recession … trust me, NPR is ALL OVER IT.
You're right. It was FDRs and Hoover's policies that prolonged the depression by 9 years.
Perhaps; I'd forgotten about them. I haven't listened to them since college and realized they were clueless dolts with an axe to grind. I guess I should have qualified my assertion more clearly, in that the media won't mention how the Obama administration's actions are responsible for so much of the economic turmoil. If they can put the blame onto businessmen and entrepreneurs, they will.
No he's a fine example of affirmative action; from his selection to attend Haaavard, and his election to the Senate and presidency.
A depression is defined as a 10% drop in GDP.
When Obama took over, the deficit INCREASED by about $1 trillion.
Do the math.
$1 trillion in new deficit spending * government spending multiplier (what is it? 3?) = $3 trillion in apparent effect of new government spending.
Add this to "stimulus" spending which went to state and local governments for cronies.
Take all this effect and divide it by the $14 trillion in GDP.
We're talking over 30 %.
So if there was no increase in deficit, we'd be DOWN BY OVER 30% in GDP.
We are ALREADY in a depression. This deficit enables our government to say "we're not in one" by citing the increase in GDP which in reality is a DECREASE since all the extra money goes to cronies.
Keynesianism does not work because current new government spending ONLY GOES TO CRONIES AND NOT TO REGULAR PEOPLE.
Or three pathetic arse hole!
I can ignore Newt being Newt…in a heartbeat. He is our best hope. Warts and all.
At the end of the day, who ever comes out will be 1000x better than BHO. Could image the adolescent commie agitator trying to debate Newt? Maybe Newt could tell him, there isn't 57, 58 or 59 states (57 with 2 left to go) and there is no such language as Austrian and it's not corpse man.
Barry and his cohorts make little Bush and his clan look like pickpockets.
Obama sucks!
You would be surprised how many ships and personnel are now stationed off Syria, or quicly on their way.
Having a hard time with the English language again?
I'm too poor to afford gold – or even silver – so I bought brass capped with copper-jacketed lead to go with my blue steel instead. It has some magic powder inside as well… I have heard it may be a valuable commodity, as well as persuasive under the wrong circumstances…
Que?
He's channeling his inner FDR.
I don't say this lightly, but if push comes to shove, we might just be better off in the long run, if they do take over. Let them crash the system and drive us underground, where at least we will free of political restraints to to do what really needs to be done.
The military will desert them by the thousands. Lets see how long their precious communism holds them up then.
The fed has been inaccurate in its projections up to this point, why should we listen to them now? Also, the fed/white house have been cooking inflation and unemployment numbers to make things look less disasterous than they are already.
There are such republican candidates, just not the liberal 'front runners' that the media wants to win.
As anne coulter said years ago, to solve illegal immigration, simply pass a law that allows illegals to sue for wages/hours violations–business would no longer have incentive to hire them instead of americans. The fact that no republican nor democrat has done this shows that the washington establishment is completely at odds with the american people on this issie.
I believe the same can be said for shoe manufacturing.
LG: I feel your despair. Four years ago, my instincts started telling me this crap was gonna be a real steaming pile. Trying to turn off the radar is like denying truth. However, GaltFan is right and we must never give up and NEVER, ever let the leftists frame the narrative or dictate the rules that govern our daily lives. Eff 'em.
And Wilson.
That's all the brat has been told. His only real world experience is acting as a small community agitator learned at the knee of Ayers and soros, and others of the same irk. If it weren't for the teleprompter and speech writers, the toddler would be for all practical purposes speechless.
Trump won't run. He is simply framing the narrative for others to take up.
Barry Sore-toe will not win re-election.
Keep the faith. Do not despair.
and lots of ammo.
Current unemployment figures only count those drawing unemployment, not those off the rolls or underemployed. One reason for the disparity in inflation is food and gasoline prices are not included.
If the toddler and dims get their way, "I will work for food and shelter" will be the new mantra among the unemployed..
Voting Democrats out is not enough. Too many Republicans are just as corrupt (if not more) as the Democrats. They go to Washington to Make Money. Serving the country is low on their list of To Do's. How many times have Republicans looked the other way when Democrats passed oppressive legislation??? How many times have Republicans supported raising taxes and entitlements just because they thought it would make them popular. It was Republicans that granted amnesty to 3 million illegals in the 80's only to create an incentive making things worse. It was Republicans happy to up the H-1B limit allowing companies to fire American workers and replace them with cheap foreign labor.
I hear a lot of trash talk about Romney Care without hearing the other side. What do you think he should have done in a liberal state like Massachusetts? If that's what the people wanted and he had alternatives that were worse with a legislature that was more liberal what do you think he should have done? If that's what the people wanted they so be it. His job was to Represent the will of the people. Obama and the Democrats have done the Opposite.
Question is this Mr. Street making up news again? I have seen no stories of such warnings from the Fed???
"Of course, "Fed Warns Unemployment May Double Great Depression" is completely false, they did no such thing."
I just wonder if Mr. Street is getting bored again and trying to make up stories like he did when he claimed the Journal Science said Global Warming was false.
You do have a valid point, i may have to stand corrected.
The only hope i have is in the Honor of those serving today, and i have talked to many, that if they were givin orders to attack Israel they would recognize that as an illegal order.
you can thank muslims for that
Unemployment numbers are comprised of those that are in the job market for the past 30 days. It does not include those that have not been in the job market in the last 30 days: people who have given up looking; those that have gone off unemployment because it has run out. One solution to unemployment is High Speed Universities check it out
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