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Welcome to the Michael Jackson Economy

madhedgefundtrader's picture




 

Those of you counting on getting your old assembly line job back in Detroit can forget it.

The recent eight year forecast published by the Bureau of Labor Statistics shows that 4.19 million jobs will be gained in the US in professional and business services, followed by 4 million health care and social assistance jobs, while 1.2 million will be lost in manufacturing. This is great news for website designers, Internet entrepreneurs,  registered nurses, and masseuses in California, but grim tidings for traditional metal bashers in the rust belt manufacturing states like Michigan, Indiana, and Ohio.

I’m so old now that I am no longer asked for a driver’s license to get into a night club. Instead, they ask for a carbon dating. The real challenge for we aged career advisors is that probably half of these new service jobs haven’t even been invented yet, and if they can be described, it is only in a cheesy science fiction paperback with a half dressed blond on the front cover. After all, who heard of a webmaster, a cell phone contract sales person, or a blogger 40 years ago? Where are all these jobs going to? You guessed it, China, and other lower waged, upstream manufacturing countries like Vietnam, where the Middle Kingdom is increasingly subcontracting its own offshoring.

These forecasts may be optimistic, because they assume that Americans can continue to claw their way up the value chain in the global economy, and not get stuck along the way, as the Japanese did in the nineties. The US desperately needs no less than 27 million new jobs to soak up natural population and immigration growth and get us back to a traditional 5% unemployment rate. The only way that is going to happen is for America to invent something new and big, and fast. Personal computers achieved this during the eighties, and the Internet did the trick in the nineties. The fact that we’ve done diddly squat since 2000 but create a giant paper chase explains why job growth since then has been zero, real wage growth has been negative, and American standards of living are falling.

Alternative energy and biotechnology are two possible drivers for a new economy. Unfortunately, the last administration did everything it could to stymie progress in both these fields, coddling big oil so China could steal a lead in several alternative technologies, and starving stem cell researchers of Federal cash, ceding the lead there to others. While the current crop of politicians extol the virtues of education, the reality is that we are dumbing down our public education system. How do we invent the next “new” thing, while shrinking the University of California’s budget by 20% two years in a row? If my local high school can’t afford new computers, how is it going to feed Silicon Valley with computer literate work force? The US has a “Michael Jackson” economy. It’s still living like a rock star, but hasn’t had a hit in 20 years.

China can have all the $20 a day jobs it wants. But if it accelerates its move up the value chain, as it clearly aspires to do, then America is in for even harder times. I’ll be hoping for the best, but preparing for the worst. How do you say “unemployment check” in Mandarin?

For more iconoclastic and out of consensus analysis, please visit www.madhedgefundtrader.com .

 

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Tue, 12/29/2009 - 15:37 | 176997 Anonymous
Anonymous's picture

Hope you didn't pay too much to learn that retort.

Tue, 12/29/2009 - 18:27 | 177218 Anonymous
Anonymous's picture

I have a 7/11 smock in your size

Tue, 12/29/2009 - 12:20 | 176744 Cursive
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@madhedge

The biggest problem is not a lack of funding, it is a lack of will.  Money often masks problems, but it never solved anything.  We are failing as a people, a culture.  We've lost our collect drive and most of us seem to want instant gratification over hard work, savings and personal discipline.  Everything that is happening in our culture is pointing toward less risk taking.  Why open a business if the state of Michigan is going to organize a phony union against you?  What about the the tortious interference of trial attorneys?  Federal, state and local governments will be raising taxes heavily in the near future to pay for massive unfunded liabilities.  Whatever is the "next big thing" we probably won't know because, collectively, we're saying that risk is bad and be severely punished.

Tue, 12/29/2009 - 13:34 | 176827 sethstorm
sethstorm's picture

What about the labor law attorneys for which not only use dirty pool to bust unions? 

What about those who also specialize in the same dirty pool to get around hiring citizens? 

Finally, what about the kind of businesses that can't give an honest answer about offshoring outside of a pink slip? 

 

See the Hyatt example for outright lying about outsourcing (albeit domestic), see the Grigsby & Cohen firm speech about their laugh at not hiring citizens.

If you want the unions gone, these folks have to go too.

 

Tue, 12/29/2009 - 13:21 | 176805 Anonymous
Anonymous's picture

It's hard to have that thing called 'savings' when it is being chipped away at in every possible way--through direct theft by taxation and indirect theft by inflation or simply by not growing via compound interest. I have had various bank and credit union accounts since sometime in the early 1980s and last year was the first time they didn't pay me diddly squat in interest. All the Treasury MM Funds blew up (quietly) in 2009, Vanguard moved me into their Admiral Fund (0.1% yield) while American Funds moved me into their regular MM Fund (Now with Added Moral Hazard (TM)) @ 0.0% yield. Until I see improvement in those simplest, historically safest "investments" there is no way I am going to be anything but risk averse. Pay me the interest, you fuckers--you're stealing from me to fix your screwy balance sheets!

As far as job growth in "Internet entrepreneurs" goes, well, believe whatever the hell you want, but the bill rates have not changed since 1999 and what used to be a great way to make a living has faltered and pay is going down, not up. Everything I look at is a bubble, quite frankly. I can't speak to actual VC funded stuff, but I always that 99% of it was a scam of some sort anyhow.

Tue, 12/29/2009 - 12:25 | 176750 masterinchancery
masterinchancery's picture

Amen; Michigan is now no mans land for business.

Tue, 12/29/2009 - 12:13 | 176736 Anonymous
Anonymous's picture

MHFT, you need to have a little more faith in the American worker, and economy. Typical post crash pessimism. See the light, be your future.

Be the ball.

Tue, 12/29/2009 - 12:09 | 176729 Shameful
Shameful's picture

I believe would be the way to say unemployment check is fu kuan zhi piao  Won't let me put in the characters for it, and is not liking the pinyin much either.

Some of us young people have actually taken it on ourselves to learn Mandarin.  A handful of us can see the writing on the wall and realize that the world is changing and not in America's favor.

I think you need to clarify the education though.  Money is not the answer.  Look at the spending per student in DC, and look at the results, then look at a place like Utah.  The problem is the whole education system we have, more money into a broken system will not fix it.  And quite honestly I would not expect much from the youth of America.  Speaking as one of them, if you place your hopes in us you will be sorely disappointed.  The narcissism and sense of entitlement is strong in this generation.

Tue, 12/29/2009 - 13:44 | 176841 sethstorm
sethstorm's picture

The only Chinese I wish to say is an indecently toned 'cao ni ma de', followed by a few things unsuitable for polite discourse.

The rest will be in US English, only.

No thank you, but I'd rather bet against the Third World and its fellow travellers who send jobs there.

 

Tue, 12/29/2009 - 13:31 | 176822 Gordon Freeman
Gordon Freeman's picture

 "Speaking as one of them, if you place your hopes in us you will be sorely disappointed.  The narcissism and sense of entitlement is strong in this generation."

Pity--one would hope that, having identified the problem, it would work to overcome it.  You certainly seem to be moving forward.

Tue, 12/29/2009 - 14:24 | 176896 Ripped Chunk
Ripped Chunk's picture

Gordo, what is your story?  Are you a lurker, or do you have something to contribute?

Young people today will accumulate the influence needed to initiate changes. It took some time to get to where we are now. It will take some time to change it.

The exciting conclusion is not right after the next commercial break.

 

Tue, 12/29/2009 - 14:15 | 176886 Shameful
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I speak in broad terms and of the majority.  I know there are great, fantastic young people in this generation, but when looking at the whole I see large problems that have not been addressed.  And how could they be?  Society has allowed the generation to go up with little disciple with a steady diet of television and what passes for culture in this country.  Look at our idols and what we aspire to be, reality TV contestants, drugged out celebrities, criminals.  In our culture we glorify stupidity and elevate it to a desirable status, and we desire to see things that are shocking to the point where really nothing is shocking anymore.  Look at the dropout rates in school, and then also look at grade inflation in not only high school but in college.  Education is gone and mediocrity reigns supreme.  Mediocrity and idiocy are a cornerstone of our culture, just look at the television.  Honestly I ave up on watching TV years age, and thank God that there is a Internet to get my news and information from. I cannot blame the youth for what they are, look at the environment and culture they were brought into.  You don't fill a bottle at a sewer and expect mountain spring water to come out of the bottle.

Now the way I see it this can go two different ways.  It's possible the youth of today will shake themselves loose from the Boomer's world and worldview and rediscover ethics, morality, hard-work, saving, etc.  Or as things get worse they will become even more selfish, narcissistic and begin to see crime or theft as normal and acceptable to get by in life.  While I hope for the best I naturally fear the worst.  The vast majority of the youth see no problem, they see themselves as the center of the world and will cling to the idiot box to tell them they are special.  Until this viewpoint changes I fear we can have no positive shift in culture.

Thu, 12/31/2009 - 10:45 | 178772 Krynn Economics
Krynn Economics's picture

Ah Shameful my friend you make it seem like all of us are corrupt. Some of us are trying to better ourselves and our children. Yet as you well know since we have discussed this exhaustively we are part of a generation that has lived with no consequences. no consequences means loose morals and a devil may care attitude.

 

What we need are true consequences the abandonment of the trying your 'personal best' is good enough. We need kids to know that losing happens and its not always okay to feel good about that. A drive to win is whats missing.

Tue, 12/29/2009 - 15:31 | 176986 Anonymous
Anonymous's picture

Shameful makes good points...
and i agree, culture is king and modern amerikan culture is bling.
i don't expect, when their need arises, for boomers to receive humanitarian goodies from these pimped out goslings we've razed.

i'm 50 years old, the son of Depression parents, and people have only become more absurd as i've aged. We left Seinfeld country some time back...past here there be monsters

Tue, 12/29/2009 - 14:31 | 176905 Winisk
Winisk's picture

Once narcissism is established the hard wiring can't be changed.  If anything it gets more exaggerated as they get older.  The glimmer of hope is that as life becomes hard once again, it will constrain future narcissistic tendencies because the children might actually have a parent in the house to care for them and there will be fewer spoiled children.

Tue, 12/29/2009 - 16:33 | 177084 Orly
Orly's picture

I disagree with Shameful in that the youth of America today is bound to disappoint in a most heinous way.  They won't.

While it is true that most of the young people today seem to care of nothing but themselves and think their generation superior to others before them, I would not characterise that as being anything other than the normal mindset of teenagers and young adults.  What were you thinking when you were 23 years old, hmm?

We all have a tendency as the older generation to think of our followers as losers and spoilt brats.  That is natural.  But it is also true that greatness is made and not born.  Throughout history, it has been shown that generations rise to the challenge and this fourth turning will be no different.

Tue, 12/29/2009 - 20:04 | 177287 Ripped Chunk
Ripped Chunk's picture

Exactly!  Many young people I know that went through a public school system and were not challenged at all are seekers. They look for knowledge where it can be mined. And they know where they are going.

Tue, 12/29/2009 - 17:15 | 177145 Shameful
Shameful's picture

I find the idea of the 4th turning interesting but I have not researched it enough to speak much on it.  And I would like to point out that I am not speaking as an elder looking down at my generation but one attempting to rationally look at my generation and make a value judgment.  I have no doubt that this generation will face hardship, however will it force us to become heroes or force us further down the path of selfishness and self-serving?  The trend says that it will lead to greater selfishness, people care less and less for their fellow man.  Also this is not only for twenty somethings, I talk about the culture as a who.  I see it exemplified in the youth of which I am a part.

I could be wrong and maybe we will change and impress the world but I personally would not bet on it.  I might change my mind if we see a religious revival.  I don't not wish to get into a religious debate but religion has been scorned for some time (or associated with war and death ala Bush) and that loss may or may not be associated with what I see as cultural decay.  My opinion is that it is, but that is just my opinion.  And yes I am aware of hypocrisy in the church.  I experienced a lot of it first hand as a child so I know that is out there and do not consider the hypocrite the same as a "true believer".

But I sincerely hope that you are right and I am wrong.

Wed, 12/30/2009 - 03:36 | 177528 delacroix
delacroix's picture

It may cause a division, It only takes 1 leader, to guide millions. I've met kids, that seem clueless, and yet they faithfully go to a low wage job, so they can make their car payment, and pay their cellphone bill. sometimes you do what you have to do, even if you resent it.

Tue, 12/29/2009 - 12:20 | 176743 Ripped Chunk
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"The narcissism and sense of entitlement is strong in this generation"  But who can be blamed? I'm 50 and if I was 20 now and watched my parents generation spend and party until the world obeyed, I would say "me too" as well. The world will no longer obey. In fact, it never has.

Tue, 12/29/2009 - 12:35 | 176756 Shameful
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Don't get me wrong the Boomers doomed us.  They created this society and raised this generation, so in most ways the fault in on their shoulders.  It's not my generations fault because we haven't had a hand in directing where we are going.  I'm simply saying not to expect us to stand up and be the greatest generation that will ride to the rescue.  If the boomers expect us to save them, then they are sorely mistaken.  I doubt our ability to save ourselves much less the spendthrift corrupt older generations.

Tue, 12/29/2009 - 16:41 | 177098 TheGoodDoctor
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Whatever happened to peace, love, and understanding?

Wed, 12/30/2009 - 09:39 | 177633 sethstorm
sethstorm's picture

It got priced out with offshoring.

Tue, 12/29/2009 - 14:15 | 176887 Ripped Chunk
Ripped Chunk's picture

I agree totally.  The next generation will need to lead us back to a moral high ground.

 

Tue, 12/29/2009 - 12:02 | 176723 Screwball
Screwball's picture

Good title.  You don't paint a very pretty picture.  Sadly, I think your spot on. Most people don't get it yet, but they have already lived better than they will ever live again.

Tue, 12/29/2009 - 10:11 | 176638 heatbarrier
Tue, 12/29/2009 - 16:40 | 177096 Anonymous
Anonymous's picture

The internet was listed as the "big thing" of the 90's. i suspect you will see much written about its influence over the next decade and the question will be seriously asked if the internet has helped create more jobs or destroy them.

Don't forget, many of those "created" jobs from the internet bubble were for companies that never turned a profit or in many cases even a dollar of revenue with ridiculous business models. All they did was collect a bunch of VC money based on chicken scratch and within a few years 90% of them were gone....

The internet is all about doing more with less, including labor!

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