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Discussion in 'Politics' started by Soaring, Aug 11, 2009.

  1. Soaring
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    Soaring Active Member

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    - It's burried down in the story, but the actual unemployment rate, called "U6", in this country is 16.3 percent. The next paragraph adds some additional workers and claims it's 20.6 percent. Can you say 'depression'?

    USA, feeble recovery; China, Brazil-great leap! | 11 August 2009 | www.commodityonline.com

    USA, feeble recovery; China, Brazil-great leap!
    2009-08-11 16:00:00

    By Martin D Weiss, PhD
    While the U.S. stumbles into a feeble recovery, Brazil and China are leaping ahead into a new boom. It’s an economic gap of massive dimensions and unprecedented consequences. It’s gradually turning the global balance of power upside down and inside out.

    Most important for investors, it’s generating some of the greatest wealth shifts of all time. To grasp the enormity of the gap, just look at the latest jobs reports from each country …

    U.S.: Chronic Depression-Level Unemployment
    Friday’s jobs release had several positives: Employers shed fewer jobs. Hourly earnings climbed a tad. The number of hours worked ticked up slightly. And even the unemployment rate itself slid by a tenth of a point. (See Mike Larson’s blog.)

    This underscores our view that the U.S. economy could enjoy a feeble recovery for several more months, much like Japan did in response to massive government intervention during its lost decade of the 1990s. (Watch the video with my forecasts or review the transcript.)

    So for anyone who had been hammered to a pulp by prior unemployment disasters, the news was clearly “less bad.” But for anyone who can step back from the trees, the long-term jobs outlook in the U.S. is still dismal:

    A key reason the unemployment rate declined is because so many people gave up looking for work. Only 59.4 percent of Americans are working, the least since the early 1980s.

    Among the unemployed, the share of those out of work for six months or more has surged to 34.3 percent, the worst since this number was first tracked 61 years ago.

    What is the actual unemployment rate in the United States? According to the government’s official measure, it’s 9.4 percent. But even the government admits that, if you include part-time workers seeking full-time jobs plus discouraged workers (those who have given up looking for work), its broader jobless measure (called “U.6″) is now at 16.3 percent.

    Moreover, John Williams of Shadow Government Statistics (Shadow Government Statistics - Home Page) reveals that, during the Clinton Administration, the government defined away large numbers of discouraged workers by dropping from its count anyone who stopped looking for more than a year.

    Add back in that group, and he estimates the actual unemployment rate in the U.S. is closer to 20.6 percent!

    Bottom line: Despite the positives in Friday’s jobs report, the big-picture outlook is still the worst since the Great Depression.

    Brazil: Lower Unemployment than Europe
    While the picture in the U.S. is positive almost entirely with the help of smoke and mirrors, Brazil’s is genuinely better:
    Brazil’s unemployment rate plunged unexpectedly in June from 8.8 to 8.1 percent. For the first time in history, Brazil’s jobless number is now lower than Europe’s.

    Most important, while U.S. employers are still cutting jobs at a relatively rapid pace, Brazil’s employers are hiring, adding over 299,000 jobs in the first half.
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    China: Unemployment under 4.5 Percent
    Like Washington’s, Beijing’s official number understates the severity of the unemployment, excluding millions of migrant workers, many of whom have lost their jobs and have returned to their homes in rural China. However, at worst, Beijing expects that its official urban jobless rate will rise to an annual average of 4.4 percent this year, still far below that of the U.S.

    And to ward off a further rise, Chinese authorities have just announced a renewed commitment to pursue and extend their economic stimulus, removing any lingering uncertainty about Beijing’s long-term intentions. Despite some lingering risks, the Chinese economy has tremendous momentum:

    China is beginning to crank up factories that had been shuttered in the wake of the global credit crisis. That’s a key reason industrial production grew 10.7 percent in June from a year earlier, the largest gain in nine months. China’s urban fixed-asset investment has surged 30.5 percent to $758 billion in the first four months of the year — more than in all of 2008.
    China’s home values are catapulting higher again: Up 35.4 percent just in the first four months of 2009, prompting developers to invest more and boosting demand for construction materials.

    Overall, China is now the world’s third-largest economy, on track to expand by over 8 percent this year. It could surpass Japan as the second-largest economy in the world before the end of 2009! And Chinese demand for goods, in turn, is again the locomotive for the rest of Asia, Brazil, and other emerging nations. For example …

    Seoul-based Hyundai saw its sales in China jump 56 percent higher from a year earlier. In contrast, Hyundai’s sales in the U.S., which used to be its biggest market, have dropped sharply.

    Komatsu in Tokyo, the world’s second-largest maker of earthmoving equipment, reports that its sales in China beat expectations in the quarter ended June 30. The company sees its China sales at about 15 percent of its total business this year, compared with 10 percent in 2008.

    AU Optronics and Chi Mei Optoelectronics, Taiwan’s two biggest liquid-crystal display makers, expect third-quarter sales to rise from the previous three-month period, thanks to a global shortage of glass and surging demand from — you guessed it — China. Just this past June, in fact, China’s TV makers said they planned to purchase $4.4 billion of flat-panel products from Taiwan this year, doubling their forecast from last December.

    Even General Motors, still the biggest overseas automaker in China, said sales in the country rose 50 percent last month, as Beijing stimulus measures spurred demand for minivans.

    Stacy Smith, Intel’s chief financial officer, puts it this way: “We are seeing Asia-Pacific stronger than the rest of the world; in particular, consumption in China looks very good.”

    UBS Beijing economist Wang Tao points out:
    “China’s recovery is major positive news, especially for commodities exporters. The strongest factor in China’s recovery is investment demand, which means it will import more commodities and machinery.”

    Sherman Chan, with Moody’s Economy.com in Sydney, says:
    “[China's] infrastructure spending will continue to gather steam and there will be a more notable pickup in the second half.”




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