Daily: The jobs crisis
No huge commentary today. But what struck me about the links in today’s edition was how many were related to the loss of jobs and income both in the US and Europe. Rick Bookstaber’s post about the Great Labor Reset has me thinking about how systemic these issues are. His thesis is that tough times are when employers make decisions that are unpopular at other times, using the events as cover for structural changes in the employee-employer contract.
The question is how long this can go on for without some sort of democratic backlash. Raghu Rajan’s post below gets to some of the issues behind this and I will use this as the lead post to think about these issues. But you can see the jobs crisis runs right across Europe and the US and the pain is severe, even now 4 years after the crisis started. If this isn’t a depression, I don’t know what is.
“Whatever the outcome of the election, the tension between democracy and free enterprise that is central to it does not bode well for either. A free-enterprise system that is sustained only by the money power of the successful is not stable, and unlikely to remain vibrant for long.”
España bate el récord mundial de paro, según el Financial Times Deutschland – ABC.es
According to Financial Times Deutschland, Spain’s joblessness is breaking world records, this Spanish article says. Spain has 24.5% and Greece comes in at 22.3%.
Statistik der ILO: Spaniens Arbeitslosigkeit bricht Weltrekord | FTD.de
This German-language article says that Germany and Greece are suffering the worst VERIFIED rates of unemployment of all time.
Die Deutschen verdienen immer weniger – News Wirtschaft: Konjunktur – tagesanzeiger.ch
This article is testament to how sharply Germany’s labour costs are being reduced. Statistics through 2010 show that one-fifth of German workers were earning under 10.36 euros per hour. The shift to cheap labor in Germany is well-advanced and one reason Germany remains competitive in export. The problem is internal demand now because of this policy.
Portugal PM’s Facebook note sparks anger – FT.com
““Mr Prime Minister, your term in office only recently began, but it is already proving a disaster, unemployment has become a permanent fact of life,” read one typical comment, many of which were lengthy and detailed.”
US Manufacturing Sector Loses 15,000 Jobs in August | Workforce content from IndustryWeek
“Looking over the past year years the sector has gained 512,000 manufacturing jobs and now stands at 11,9670,000 employment.
However compared to 2002, which saw its highest level of employment at 15, 475,000, employment is down by 3.5 million manufacturing jobs.”
Kodak cuts a further 1,000 jobs – Telegraph
“The decision comes amid efforts to repay its $700m debts to creditors, in a bid to avoid bankruptcy.
The expected savings from Monday’s cutback is approximately $330m.”
HP adds to layoff tally, now plans 29,000 job cuts | Reuters
“Hewlett Packard now plans to layoff 29,000 employees, increasing the total number of job cuts by 2,000 over the next two years as it tries to kickstart growth.”
Europe
BBC News – Italy recession deeper than first estimated
“The Italian economy shrank by 0.8% between April and June, slightly more than previously estimated, official figures have shown.”
In the second quarter of 2012, Italy registered its 4th quarter of declining GDP in succession. The economy shrank by 0.8% q-o-q and is now 2.6% smaller than in Q2 2011. Since Q4 2009, the economy has shrunk 3.5%.
Weidmann is winning the debate on policy – FT.com
“Mr Weidmann is a pivotal figure in all these debates. He has become the effective leader of the opposition to the current European consensus on a policy response to the crisis. On Thursday, he lost a battle in the ECB’s governing council. But this was a battle he was never going to win. My sense is that he is winning the overall debate – a victory the eurozone is unlikely to survive in one piece.”
The euro crisis is not over and is about to get interesting – Telegraph
“High bond yields have been a reaction to the underlying problem, not the cause of it. Indeed, the underlying problem is only partly financial. In several member countries, government finances are perilously weak. But worse than this, their economies show next to no economic growth, or are even contracting. While this continues, their debt ratios will continue to rise.”
Carthaginian terms for Italy and Spain threaten Draghi bond plan – Telegraph
“The Draghi Plan is a unquestionably a transforming step. The tail-risk of a sovereign defaults in Italy and Spain must be taken off the table. It was recklessly irresponsible for EU leaders and authorities to allow the second pillar of the world’s monetary system to break down altogether and remain in paralysis for over a year, and we all know was responsible for that epic misjudgement.
Yet the ECB’s willingness to act – once the EFSF/ESM trigger is pulled – is plainly not enough in itself to save the euro. Primat der Politik is back in tooth and claw. Democracies will make or break EMU.”
Hollande diseña un ajuste de 33.000 millones, la mayoría vía impuestos – CincoDías.com
France is making 33 billion in fiscal adjustments, mostly through tax increases in order to make fiscal targets in 2013
Poland: no end to housing slump | beyondbrics
“The state of Poland’s residential property market has analysts grasping for words to describe what’s going on – although a glance in the thesaurus for adjectives such as “dreadful”, “awful” and “gloomy” might help.
In its latest look at the selling prices of flats in Poland’s largest cities, Open Finance, a real estate advisory company, finds that the slump which started in late 2007 shows no signs of slowing.
Prices in many big cities like Wroclaw, Warsaw and Krakow are falling at annual rates of 10 per cent or more. According to an Open Finance index, average prices are now down 23 per cent since the end of 2007.”
Germany faces ECB backlash – FT.com
“But Peter Bofinger, a member of the government’s council of economic advisers and professor of economics at Göttingen university, said bond-buying in the open market was “a standard instrument of monetary policy” which had been used by the Bundesbank itself when it was in charge of German monetary policy.
“The problem in Germany is that somehow public opinion is like the behaviour of a child,” he said on Friday. “They know definitely what they don’t want. They don’t want bond purchases. They don’t want eurozone bonds. They don’t want a debt redemption fund.
“Yet most of these people still say they want the euro. If they said they wanted to go back to the Deutschmark, it would be a more honest approach.””
La economía griega cae otro 6,3% en el segundo trimestre del año – ABC.es
In the second quarter, the Greek economy contracted another 6.3% from a year earlier. As Greece awaits another aid package, the country loses thousands of jobs daily as the recession has lasted 5 years without interruption. Sounds like a real depression. Horrific.
United States
Sheila Bair Visits Occupy Wall Street « naked capitalism
“Sheila Bair, the former FDIC chairman who heads the Systemic Risk Council, and Ricardo Delfina, a fellow Systemic Risk Council member, met on Sunday with members of several Occupy Wall Street working groups: Occupy Bank, Alternative Banking, and Occupy the SEC. I’ve watched presentations by Bair twice previously: once when she was at the FDIC, another not long after she had left government service. Even though she had been pretty direct in those discussions, she was surprisingly specific in this meeting about some of the impediments she faced during the crisis.”
South Korea sets $5.2 billion stimulus package as economy falters | Reuters
“South Korea unveiled a $5.2 billion stimulus package on Monday, including tax breaks worth $2 billion, as the government tries to shore up Asia’s fourth-largest economy in the face of Europe’s protracted debt crisis.”
Fed Stuck at Zero Into 2015 Seen in Swaps, QE Odds Reach 99% – Bloomberg
“Just six months ago, money market traders expected the Federal Reserve to raise interest rates by the end of 2013. Now, they see borrowing costs staying at record lows for about three more years as the economic outlook worsens.”
“As my grandma used to say, honesty is the best policy. But you know what else is a pretty good policy? Giving traffic tickets only to people who are actually alive. The cop fired by the New York Police Department says he was issuing summonses to deceased people, but only because he had to fill monthly quotas the NYPD says don’t exist.”
Technology
Is The Next iPhone Already In Patent Trouble? | TechCrunch
“When it comes to 4G LTE connectivity, smartphone makers have accumulated patents over the years in order to be prepared for any patent lawsuit. As Apple has not released a 4G phone yet, it is late to the game. Competitors want to take advantage of the situation and prevent Apple from releasing a 4G LTE iPhone.”
Leaked Apple device IDs not stolen from FBI, but Florida app maker — Apple News, Tips and Reviews
“Wait, what? Anonymous, the shady hacker collective, was not truthful about the source of the UDIDs it dumped on the web last week? It turns out that a Florida company that builds mobile apps for publishers is claiming that the device identifiers belong to it.”
Apple’s Krall Leads Samsung Win in Jobs’ Global Smartphone War – Bloomberg
“Krall joined an Apple team that viewed Android device makers as a threat to its core business of selling distinctively designed consumer electronics at a premium price and with industry-leading profit margins.
By releasing similarly designed devices, Samsung and others undermine what Apple’s products are worth to customers, Apple’s lawyers argued during the San Jose trial.”
Daily Android tablet sales nearing 40% of iPad sales — Mobile Technology News
“The common belief that “there’s no tablet market, just an iPad market” may be changing. Based on the number of daily device activations, the gap between Google tablet sales and those of Apple’s iPad is closing. Improved software and the Nexus 7 tablet are likely reasons.”
Amazon Unveils New Kindle Tablets – WSJ.com
“”Amazon did what it has to do to compete with Apple, Google and other tablet makers,” said Colin Sebastian, a Robert W. Baird & Co. analyst. “This will put some pressure on them, particularly on price.””
Facebook Investors Know Exactly Whom to Blame – Bloomberg
“So who is to blame if you lost money on Facebook? The fault is entirely your own. This isn’t a game for crybabies.”
Apple’s ‘iPhone 5’: will music streaming be the surprise extra? | Technology | guardian.co.uk
“”Our target is for Apple to sell 50m iPhones in the fourth quarter, of which 28m will be the iPhone 5,” said Neil Mawston, executive director of research firm Strategy Analytics. That compares with 37m iPhones in total in the same period a year before, of which Mawston reckons 20m were the then-new iPhone 4S.”
HootSuite CEO: We’re Buying Seesmic For The Users, Not The Tech [Interview] | TechCrunch
“Ryan Holmes, the CEO, has given us some more color on the deal, and we’ve found out some other details as well along the way.
The companies are not disclosing the price, but we have been told it will be based on how well HootSuite manages to convert Seesmic users on to its own product. Holmes tells me it’s buying the company mainly as a customer play, not primarily a technology play, unlike many of HootSuite’s past acquisitions.”
Samsung reportedly dropped as memory supplier for first batch of next-gen iPhones
“The Korean Economic Daily cites another person familiar with the matter who said Apple dropped Samsung memory completely for initial iPhone rollout. Taking the place of Samsung’s units will be parts made by Toshiba, Elpida Memory and SK Hynix.”
“Its price point? $499, officially putting it in iPad territory.
Except that Amazon, in a Prime-like move, is offering a data plan of 250 megabytes per month through AT&T, with 20GB of cloud storage — for $50 a year.”
Amazon’s Jeff Bezos Positions Kindles Against iPads – Peter Kafka – Media – AllThingsD
““We want to make money when people use our devices, not when they buy our devices.”
That is: Amazon is selling Kindles and Kindle Fires so it can sell more stuff to consumers. That could be by selling them more media, like ebooks and videos, or by getting them to buy more physical goods, via Amazon Prime. Or it could be by advertising, which was also curiously absent from Bezos’s pitch today.”
Apple Seeks to Create Pandora Rival – WSJ.com
“Apple only recently initiated licensing negotiations with record labels for its putative service and, even if it does complete deals, it could be a matter of months before such a service might launch, according to these people.”
Amazon’s Jeff Bezos on Competing Directly With Netflix Streaming – Peter Kafka – Media – AllThingsD
“Duryee: We are also hearing that studios would like you to decouple video from Prime and have you sell it as a standalone service, like Netflix.
Bezos: There are a lot of studios, and they are not all like-minded. We have very good relationships with studios, and we just did a big deal with Epix a couple of days ago, so, yeah, I like our approach.
But could they make you change your approach?
Bezos: Well, it’s their content, so they can license it however they like, but they aren’t all like-minded. We are trying to offer people a service they like, so I’m very confident that we can find content for them.”
Other Links
BBC News – China trade data raises fear of economic slowdown
“China’s exports grew less than forecast and imports fell in August, adding to fears about a sharp slowdown in its economy.
Exports rose by 2.7% from a year earlier as global demand continued to remain subdued.
Imports fell 2.6% from a year ago, indicating a decline in homegrown consumption.”
Made in Mexico gains ground on China | beyondbrics
“Barclays provides interesting and detailed analysis of Mexico’s productivity gains in recent years, including in areas in which it has started to specialise and in which it has comparative advantages. Just a handful of examples are transport equipment, telecommunications equipment and automotive parts.
This is all excellent news for Latin America’s second-largest economy.”
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