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Guest Post: Why Employment Is Dead in the Water

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Employment is dead in the water because opportunities for organic expansion are few and the cost basis of doing business in the U.S. keeps rising.

Let's start by reviewing the basics of employment in the U.S. Courtesy of the St. Louis Federal Reserve, here is the non-institutional civilian population of the U.S. (Note that the Civilian Non-institutional Population With No Disability, 16 years and over (LNU00074593)--roughly speaking, the workforce of the nation-- is 215 million).
Here is the percentage of the population with some kind of job: note this could be self-employment that earns $1,000 a year or a job with 4 hours a week; recall that 38 million American workers earn less than $10,000 per year, 50 million earn less that $15,000 a year and 61 million earn less than $20,000 annually. All these numbers are drawn directly from Social Security Administration payroll data.
Here is real (adjusted) gross domestic product (GDP), which includes government spending: (in other words, as you borrow-and-blow trillions of dollars, GDP rises).
Unfortunately, employment hasn't risen along with the population or the GDP: the only metric with any meaning is full-time employment, as self-employed and part-time jobs may pay a few thousand dollars a year and should not be included in the same category as full-time jobs.
In sum: the population and GDP have both expanded smartly since 2000, but full-time employment has barely edged above levels reached 13 years ago.
Academic economists and political progressives would have us believe that the only thing restraining employers from hiring millions more people is lack of access to cheap credit.
The explicit assumption here is that cheap credit is all employers need to expand their workforce. This is so out of touch with reality that it beggars description.Progressives and academic economists generally claim the Federal Reserve's zero-interest policy (ZIRP) and its other policies of flooding the economy with liquidity "are working," i.e. boosting the economy.
Here is what the Fed's policies are boosting: financial sector profits Please compare this chart with the chart above of full-time employment, and then decide where the Fed's free money/easy credit is flowing.
Here are financial profits per capita:
The only way to understand why employment is dead in the water is to stand in the shoes of a potential employer or entrepreneur. Remarkably, this perspective is unknown to economists and progressive politicians because they have never been an employer (and no, hiring a grad student to grade papers or an illegal nanny to watch your kids does not make you an employer.)
I have described this vast divide between small business employers, entrepreneurs and the self-employed and those working in government or Corporate America as one of the least explored social/economic divisions in the nation.
Those who have spent their careers in government or academia have little idea what it takes to hire more people. Number one is a business with strong demand for one's products or services. In a developed world with too much of everything except energy, that is no small challenge: the world is awash in over-capacity in every field except niche industries such as deepwater oil rigs.
Second, you need a process that generates so much value (specifically surplus value) that you will generate immediate profits by hiring more people.
If the value added by additional labor is low, then you have no reason to hire more employees, even if Ben Bernanke personally knocked on your door begging you to borrow a couple million dollars at low rates of interest.
If an additional unskilled worker will cost $10 an hour and might generate $100 a day in additional gross revenues, that is $20 in gross profit. But the overhead costs of operating a business are rising faster than inflation: junk fees imposed by cities, counties and states, workers compensation and disability premiums, healthcare costs (if you hire full-time workers), energy costs, and so on.
For most businesses, overhead costs 50% to 100% of total employee compensation--wages plus benefits and payroll taxes. So adding another employee to gross 20% more doesn't make it worthwhile--it actually generates a loss once overhead costs are paid.
The only time it makes sense to hire another worker is if that worker will create 100% or more surplus value from their labor. For example, a worker paid $200 a day in total compensation generates $400 more in gross revenues--enough to not only support the added overhead but net the business a profit.
In a global economy, competition constantly lowers the premium most businesses can charge. That places most businesses in the vice of declining gross margins and higher labor/ overhead costs. The only way to stay solvent is to grow revenues and slash costs so declining gross margins are still enough to pay the bills and leave some return on capital/time/risk invested.
Cheap credit doesn't create surplus value, increase gross margins or get rid of over-capacity. It is a financial non-sequitur for all but a relative handful of enterprises. The only firms interested in borrowing money for expansion are those relative few in sectors that are not burdened with overcapacity. That might include oil services, network security and a handful of others.
But high-margin sectors such as technology either get funding from venture capital or their high margins generate enough income to fuel expansion without taking on debt.
The only companies borrowing vast sums of money are those paying off higher-cost existing debt with new cheap-credit loans. The savings from lower interest payments don't flow to new hires, they flow to the bottom line and from there to executives, owners or stock buybacks that boost the portfolios of institutional owners.
Employment is dead in the water because opportunities for organic expansion are few and the cost basis of doing business in the U.S. keep rising. That vise forces businesses large and small to reduce labor costs while boosting productivity. There is no other way to stay solvent in a post-bubble, over-capacity, over-indebted consumerist economy awash in too much of everything but energy, common sense and fiscal prudence.

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Sun, 01/27/2013 - 20:52 | 3189891 icanhasbailout
icanhasbailout's picture

"real GDP growth is not translating into full-time jobs" because that GDP growth ain't real.

Sun, 01/27/2013 - 20:58 | 3189904 NemoDeNovo
NemoDeNovo's picture

Truth is Treason in the New 'merika Bitchez!!!!


What we NEED is some 'ol Skool Wall Street Pro....memeber him?


In case you forgot ---->


A BLAST from the PASt but worth the trip.......

Sun, 01/27/2013 - 21:04 | 3189915 wee-weed up
wee-weed up's picture

But do not dispair...

Obama & Biden will soon give us the Fifth Annual Summer of Recovery!

Sun, 01/27/2013 - 21:10 | 3189936 trav777
trav777's picture

Maryland wants to raise the minimum wage to $10/hr because of all the people it would help.

As if the money can just come from fucking nowhere.  I guess that's really how it is for legislators.  And some idiot gov talking head said also that you should object if the retailers try to pass the CC fees on to you (that visa, mc, amex charge for processing).  LOL, who the fuck do they actually think PAYS those fees?

Sun, 01/27/2013 - 21:19 | 3189960 fonzannoon
fonzannoon's picture

"As if the money can just come from fucking nowhere"

85 bil a month. Every month. Split it up and send everyone a check. There are no consequences. So let's stop arguing over trivial shit.

Sun, 01/27/2013 - 21:34 | 3190001 max2205
max2205's picture


Sun, 01/27/2013 - 22:11 | 3190098 TruthInSunshine
TruthInSunshine's picture

Now that King Obama has been re-installed, the Main Stream Media has begun to leak some quite depressing (suddenly discovered & reported, huh?) facts about how many millions more decent paying, middle class jobs will be lost in the U.S., the EU, and in other nations/regions due to the absolute human labor displacement phenomena of automation & technology.

You see, things will get FAR WORSE, but it won't be Obama's fault, despite his pre-election pledge that things were about to get FAR BETTER:


AP IMPACT: Recession, Tech Kill Middle-Class Jobs; Tens of Millions More Jobs About To Be Lost in U.S., EU, Other Nations

ABC News ‎- 2 hours ago

NEW YORK -- Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.

And the situation is even worse than it appears.

Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What's more, these jobs aren't just being lost to China and other developing countries, and they aren't just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.

They're being obliterated by technology.

Year after year, the software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of doing more efficiently tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.


EDITOR'S NOTE: First in a three-part series on the loss of middle-class jobs in the wake of the Great Recession, and the role of technology.


"The jobs that are going away aren't coming back," says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of "Race Against the Machine." ''I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years."

The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they're on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are starting to disappear.

"There's no sector of the economy that's going to get a pass," says Martin Ford, who runs a software company and wrote "The Lights in the Tunnel," a book predicting widespread job losses. "It's everywhere."

The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.

In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Experts warn that this "hollowing out" of the middle-class workforce is far from over. They predict the loss of millions more jobs as technology becomes even more sophisticated and reaches deeper into our lives. Maarten Goos, an economist at the University of Leuven in Belgium, says Europe could double its middle-class job losses.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.

To understand the impact technology is having on middle-class jobs in developed countries, the AP analyzed employment data from 20 countries; tracked changes in hiring by industry, pay and task; compared job losses and gains during recessions and expansions over the past four decades; and interviewed economists, technology experts, robot manufacturers, software developers, entrepreneurs and people in the labor force who ranged from CEOs to the unemployed.

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Sun, 01/27/2013 - 22:13 | 3190105 trav777
trav777's picture

they need people who can tell the machines what to do.  I do that.

And I've seen the shit that passes for "development" from indians...ugh.

I plan to tell the machines to vaporize all of you when the time comes, just fyi

Sun, 01/27/2013 - 22:16 | 3190111 Xibalba
Xibalba's picture


Sun, 01/27/2013 - 23:39 | 3190315 economics9698
economics9698's picture

"Those who have spent their careers in government or academia have little idea what it takes to hire more people. "

Yea they do but they do not give a shit as long as the paycheck is signed every two weeks.  

Mon, 01/28/2013 - 00:56 | 3190488 YBNguy
YBNguy's picture

"Hide yo kids, hide yo wife, THEY rapin' e'ry-body!"

Mon, 01/28/2013 - 10:13 | 3191080 Oldrepublic
Oldrepublic's picture

after the great reset many of those "workers," will be working in flea markets. Like the over educated ex government workers in Ukraine and Russia who use to sell shoes with a  PHD in physics!

Mon, 01/28/2013 - 00:02 | 3190368 bnbdnb
bnbdnb's picture

I'm a programmer/developer for healthcare billing firm. We added over 5 million patients and 10 new million dollar clients.


We hired zero.


OOP kills.

Mon, 01/28/2013 - 11:09 | 3191246 Gimp
Gimp's picture

Yes, OOP kills but for the developers inheritance, polymorphism rocks!

Mon, 01/28/2013 - 02:29 | 3190604 nicxios
nicxios's picture

The march to technological takeover is an earth-changing event that we're witnessing. 

If people don't wake up, all that excess capacity and unemployed people will be put to use--war. War fixes the problem for the top. Since I have no confidence in the stupid masses, it will be a reboot and not a change in paradigm, with the top remaining at the top and continuing the thievery and fraud.




Mon, 01/28/2013 - 11:55 | 3191434 TMLutas
TMLutas's picture

The one glaring job opportunity I see to avoid this dynamic is in overseeing government to dig out and kill those overhead costs. It's not a job that will ever be finished and unlikely to be outsourced. The only question is how to do it profitably. 

Mon, 01/28/2013 - 04:23 | 3190688 Son of Loki
Son of Loki's picture

TIS, the NYT just published what sectors have the lowest unemployment rates:

1. clergy;

2. policemen; and

3. petroleum engineers.


That's what I remember. All of these about 1.2% joblessness.

Mon, 01/28/2013 - 08:44 | 3190874 onthesquare
onthesquare's picture

windows 8 will save us from advancing technology

Wed, 01/30/2013 - 18:59 | 3200596 kchrisc
kchrisc's picture

"That's funny! I don't care who you are. That's funny."

Mon, 01/28/2013 - 14:00 | 3191914 kchrisc
kchrisc's picture

If it's in the propaganda media, it's propaganda.

The propaganda here is "more job losses coming, but don't blame us pols, crats & elites, 'cause the machines did it."

If they are making excuses in advance, then the shit is going to get real bad soon.

"And in other news, the administration today announced that 'we are war with the machines, always have been.'" hujel

Sun, 01/27/2013 - 22:50 | 3190184 SafelyGraze
SafelyGraze's picture

"Note that the Civilian Non-institutional Population With No Disability .."

however, if you include prison population making 11 cents per hour, non-civilians, persons with disability, and undocumented workers, the employment picture actually looks very strong 

Mon, 01/28/2013 - 00:56 | 3190489 Quantum Nucleonics
Quantum Nucleonics's picture

Sadly, most politicians really do think raising the minimum wage is good, and they really do think the money comes from nowhere.  After all, we are talking about people like Shelia Jackson-Lee who asked mission control if the Mars rover would be able to see our lunar landers and extoled the peaceful North Vietnamese "merger" with the South.

They also know very well where those CC fees flow.  From consumers, to retailers, AFTER, the politicans get their cut and Dick Durbin gets his papal ring kissed.

Mon, 01/28/2013 - 09:13 | 3190912 LawsofPhysics
LawsofPhysics's picture

"As if the money can just come from fucking nowhere. "


But it can Trav, central bankers create money from nothing all the fucking time.  Like Jamie Dimon said, it's too complicated for you debt-slaves to understand, now shut up and pay the interest bitch.

Sun, 01/27/2013 - 22:24 | 3190132 mess nonster
mess nonster's picture

LMFAO One funny video!

Sun, 01/27/2013 - 20:53 | 3189895 Karlus
Karlus's picture

I herd Lambos are selling like hotcakes in DC, besides Obama sez private sector doing fine

Sun, 01/27/2013 - 20:58 | 3189902 kaiserhoff
kaiserhoff's picture

Things are just peachy now.  Wait until Obamycare rapes small business next year.

Sun, 01/27/2013 - 21:24 | 3189975 wee-weed up
wee-weed up's picture

Next year??? So I guess the last four years have been just inappropriate foreplay?

Sun, 01/27/2013 - 21:42 | 3190019 lunaticfringe
lunaticfringe's picture

How about Oct 1 this year? i can't wait. A single guy if he smokes? How does 700 a month sound?

Sun, 01/27/2013 - 21:57 | 3190055 willwork4food
willwork4food's picture

What if I smoke, drink, and text while I'm whistling at the hottie in the car next to me?

Mon, 01/28/2013 - 04:03 | 3190678 Parrotile
Parrotile's picture

Hope you've still got a "Middle Class Income" then!

(Or you have useful friends in high places!!)

Sun, 01/27/2013 - 22:37 | 3190159 SamAdams
SamAdams's picture

In Soviet Amerika all jobs are created by the Government to support the machine.  How many jobs in surveillance or police has our government created since 2007?

Gun grab = They want civil war so they can throw the dissenters into those FEMA camps and the shadow government can come out in a full 4th Reich tyranny.  It will almost be worth it just to see the look on the liberals faces.....


Sun, 01/27/2013 - 21:02 | 3189913 reader2010
reader2010's picture

JOBS is just another four-letter word in English.

Sun, 01/27/2013 - 21:04 | 3189916 clara-to-market
clara-to-market's picture

Employment is dead because all the jobs were shipped overseas.

The powers-that-be forgot what makes America great.

And it ain't fucking rich people.

It's the middle class.

Without them, we're just another banana republic.

Sun, 01/27/2013 - 21:14 | 3189944 trav777
trav777's picture

the middle class was built via labor pricing power through unions.  These unions then sold out to business and government which sold out to each other and banking.

Now there is a revolving door between government, union, corporate, and's because they all merged.  You won't get a fair shake from anybody these days.

Sun, 01/27/2013 - 22:02 | 3190080 augustus caesar
augustus caesar's picture

bullshit the middle class was not built by unions way to buy into the propaganda, the union middle class just REPLACED the old middle class, just as the army of government workers REPLACED a good portion of the private sector union members as our current middle class

Sun, 01/27/2013 - 22:12 | 3190101 espirit
espirit's picture

It's all good if the govenment workers pay the bulk of the taxes.

ZeroSum Game? Keeps the ole velocity up to speed.

Mon, 01/28/2013 - 00:35 | 3190448 Things that go bump
Things that go bump's picture

Government workers don't pay tax; they claim to, but they lie.

Sun, 01/27/2013 - 22:14 | 3190108 trav777
trav777's picture

there was no middle class before unions, you fucking moron.

How do you think communism gained so much traction?

Sun, 01/27/2013 - 22:48 | 3190183 augustus caesar
augustus caesar's picture

You're out of your element Donny, tell me how you feel about black people

Sun, 01/27/2013 - 23:22 | 3190259 FreeMktFisherMN
FreeMktFisherMN's picture

Unions did not create the MC. Private enterprise and wealth creation did. An entrepreneur seeks a profit, and he needs to hire people to help him pursue profit. The people may be very skilled, and if he's not paying them well enough, they can go elsehwere. Labor is subject to competition, too, although now it is all about minimum wage and 'social justice' that has killed free enterprise. 

The only way in a free market somebody makes a profit is to figure out something somebody wants, build it, and sell it to them at a price they can afford/will pay, and that leaves the supplier some equity after covering his costs. He thus serves his fellow man, and even if he gets super rich, this is just a signal that he is productive. Meanwhile peoples' std. of living goes way up as more stuff gets built, and more efficiently, such that even the lower classes live higher than the highest classes of many countries.

Sun, 01/27/2013 - 23:25 | 3190270 FreeMktFisherMN
FreeMktFisherMN's picture

Just like OSHA didn't make the workplace safer. Technological advances spurred by profit motive did. Firms have reputations to maintain, and people won't work there if it's too dangerous and/or there are better alternatives. 

Sun, 01/27/2013 - 23:25 | 3190271 FreeMktFisherMN
FreeMktFisherMN's picture

Just like OSHA didn't make the workplace safer. Technological advances spurred by profit motive did. Firms have reputations to maintain, and people won't work there if it's too dangerous and/or there are better alternatives. 

Mon, 01/28/2013 - 03:40 | 3190666 icanhasbailout
icanhasbailout's picture

a bit tough for that to be the case given unions date to the 19th century and middle classes goes back hundreds of years before that

Mon, 01/28/2013 - 09:03 | 3190897 onthesquare
onthesquare's picture

face it.  The last 100 years have been a freefall for spoon fed labour.  The man who employs you benefits more from your labour than what he rewards you with.  Slave.

Work for yourself and never look back.  You eat, drink and sleep your work but you are constantly focussed.  You will learn how to relax and forget the work and how to enjoy life and work together.  Stay out of retail.  Some jobs are out there that are fixing legacy equipment.  40 year old components that are not replaceable for numerous reasons and the cost to keep the system going, based on that legacy component?...priceless.

Mon, 01/28/2013 - 00:59 | 3190498 Quantum Nucleonics
Quantum Nucleonics's picture

Its' government that made American labor unproductive with crushing regulation and high taxes.  You can't really blame the business.  They either move overseas or they shut down.  Either way the job here is gone.

Sane regulation and lower taxes would make the US worker competitive.  They'd be the catalyst to lower unemployment, but we'll have to wait for 2017.  In the meantime, get your popcorn - QE should wear off soon and were exiting the seasonal adjustment twilight zone back to spring reality.

Mon, 01/28/2013 - 02:15 | 3190578 HurricaneSeason
HurricaneSeason's picture

The corporations really don't like sending jobs overseas for $250 labor a month, but they have no choice because their profits would be taxed at 25-35%.  If they'd cut the corporate tax rate, the jobs could come back, but pay $1.50 an hour and none of that unemployment, social security, healthcare, workman's comp, EPA or that other crap.

Mon, 01/28/2013 - 03:03 | 3190636 Poetic injustice
Poetic injustice's picture

Okay, I am willing to hire you for 1,50$ per hour without any paperwork. Send me your CV, I need engineers and IT workers.

Sun, 01/27/2013 - 21:05 | 3189920 TrustWho
TrustWho's picture

...and using Apple as a model, innovation does not create American manufacturing jobs, so the future employment outlook is bleak.

Mon, 01/28/2013 - 09:06 | 3190901 onthesquare
onthesquare's picture

Apple as a model for what?

Sun, 01/27/2013 - 21:10 | 3189935 world_debt_slave
world_debt_slave's picture

yep, went from a $105 per hour 1099 to now $8.75 per hour W2 slave.

Sun, 01/27/2013 - 21:12 | 3189938 apberusdisvet
apberusdisvet's picture

Excellent post; it should be shoved up Krugman's ass and eaten by Obama

Sun, 01/27/2013 - 21:15 | 3189947 ReptilianSlaveMaster
ReptilianSlaveMaster's picture

I guess we'll need some more QE, buying more calls on SPY on Monday. It's time for you intelligent snobs to stop thinking and turn off all information.. JUST BTFD AND SLEEP, BITCHEZ

Sun, 01/27/2013 - 23:58 | 3190364 Missiondweller
Missiondweller's picture

+1 for sarcasm

Sun, 01/27/2013 - 21:15 | 3189948 Bear
Bear's picture

Soulda let the banks fail in 2009 ... we would have recovered by now

Sun, 01/27/2013 - 21:32 | 3189995 espirit
espirit's picture

...and new bubbles would have been born from greed that goes unpunished...

Mon, 01/28/2013 - 01:42 | 3190545 TWSceptic
TWSceptic's picture

Hello there. Greed is not the problem, fascism is.


Actually without greed we'd probably still live in caves.

Sun, 01/27/2013 - 21:23 | 3189967 philipat
philipat's picture

But other than that, all is well?!!

Sun, 01/27/2013 - 21:32 | 3189997 Tijuana Donkey Show
Tijuana Donkey Show's picture

Good links. The final one about deposits needs some detail on retail vs corporate. People in America are waiting for something to happen. I normally go the range at least once a month to practice, but I can't find new ammo to save my life. I fear using it for practice, when I might need the real deal soon enough. Thank God for the air rifle, at least I can target shoot and stay somewhat focused!

Sun, 01/27/2013 - 21:47 | 3190027 espirit
espirit's picture

Also a comment on the final article/link.

$114 billion out of $5.35(?) trillion may sound like a fortune to you and me but... it's chump change to the Fed and banksters.

"Another set of data from the US Federal Reserve shows some deposits may have moved within the banking system from one type of account to another."

Duh! Not hard to imagine said banks moving "your" money around for an administration fee, scalping interest, or investing for you at the most untimely rampapaloozas.  Or, the Fed is just guessing because they don't have permission to look at the cooked books.

Mon, 01/28/2013 - 04:32 | 3190691 Son of Loki
Son of Loki's picture

Deposits will keep flooding out of banks as people use cash to buy stuff since many stores now charge a "swipe fee" of 1-3% for credit card users. Basically, they are passing their costs on the cc users. So more folks are using cash at check out. Take a look nex ttime you are shoppng and see how many wip out their cash instead of a credit card.


Of course, you have a large group sucking cash out of their 401's and bank accounts to pay for every day living expenses ---food, little Johnny's new iShit, Buffy's latest Calvin Klen jeans, etc.

Sun, 01/27/2013 - 21:27 | 3189982 Tijuana Donkey Show
Tijuana Donkey Show's picture

Great, direct point on this article. I run businesses as a CEO for hire (small businesses, for turn-around. The "company jet" is a joke about my station wagon.) Loading a business with the junk fees, health costs, etc, is crippling in an economy where the inflation rate is higher than reported, and most small businesses are living off an owner subsidy. The owner subsidy is when an owner runs a company, and does more work than it would cost to replace them. I have businesses that I vet out all the time, and I see this happening. Add the fact that many have gotten by on a little extra cash by claiming losses, and the tax impact of actually making a profit, and most people are stuck on a slow treadmill of doom. I thought the vendors at the flea market were smarter than most, as they were able to dodge and avoid some sales, business, and income tax, until the state came through, and nailed them for 10+ years back! (Flea markets are a great gauge of the economy and society, btw. I see many larger ticket items priced in pre-1965 silver, gun transfers, and people getting irritated when ICE and Homeland agents roll through looking for non-licensed sportswear and DVD's.) America has a case of the flu, and I'm waiting for it to puke (revolt) and finally start to feel better. I understand the anger of those who still have something being mad about the freeloaders, but what is there for them? Working is pointless, you get less, and feel worse for it if your not on the top. Who here would flip burgers, mow yards, etc, when your getting less, and getting messed with more? I have a peer who hasn't existed on paper for 8+ years, and he lives nearly as well as I do, with less paperwork. Only tech or GOVT supported businesses that can chase returns that are above the cost of capital, and inflation, have any chance. Anyone else is just circling the drain, waiting to die. 

Sun, 01/27/2013 - 21:59 | 3190056 Omen IV
Omen IV's picture

"Loading a business with the junk fees, health costs, etc, is crippling in an economy"

my experience it isnt these operating costs - but dwindling unit volume with no pricing power which cant reach breakeven- when you can all buy the same goods from china from multiple sources they all start discounting to gain volume which never appears -

services are the same but more sticky - the solution is cut the border off and the WTO - starving the people's wages directly or indirectly  on a macro basis only produces less aggregate disposable income and therefore less demand - viscious circle with no resolution


Sun, 01/27/2013 - 22:00 | 3190073 TrustWho
TrustWho's picture

I buy and sell main street businesses with revenues less than $5 million. You are absolutely correct as gross margins are getting squeezed, balance sheets shrinking and owner sweat equity increasing. In fact, small business owners have NOT received their due in helping this economy through this depression. How much longer can they continue? My opinion--not much longer.

Sun, 01/27/2013 - 23:00 | 3190207 I think I need ...
I think I need to buy a gun's picture

thats me and your right,,,,boehner cries and says small business i can't fuckin stand it

Sun, 01/27/2013 - 23:19 | 3190249 augustus caesar
augustus caesar's picture

Good post, I see it every day as well

Mon, 01/28/2013 - 09:58 | 3191030 SWRichmond
SWRichmond's picture

Living it.

Sun, 01/27/2013 - 23:21 | 3190255 phaedrus1952
phaedrus1952's picture

My sentiments exactly.  I am in the food distribution business here on the left coast and a great many of my competitors/peers are throwing in the towel at an accelerating pace. Former owner/operators are working as hired help - when possible - in remaing firms, supervisory personnel are back to doing entry level work just to keep an income.  Our customer base, collectively, is shrinking dramatically.  Biggest uptick I've seen is in tupperware-covered food jamming office refrigerators for lunchtime consumption ... and I'm referring to some pretty upscale businesses.

Sun, 01/27/2013 - 21:29 | 3189984 sitenine
sitenine's picture

Spot on, and here's something else to think about - most 'family units' that are still functioning now rely on two incomes to support the household, and this was not true in the 1980's. So, in truth, the situation is far more dire than the data suggests.

Sun, 01/27/2013 - 21:33 | 3189999 Tijuana Donkey Show
Tijuana Donkey Show's picture

Spot on. Two incomes, and the kids don't get raised properly, and no one can cook a proper dinner for the family. 

Mon, 01/28/2013 - 17:21 | 3192654 Race Car Driver
Race Car Driver's picture

... and the art of conversation is lost.

Sun, 01/27/2013 - 21:36 | 3190004 Never One Roach
Never One Roach's picture

The private sector is dead. period.

Sun, 01/27/2013 - 21:53 | 3190042 Anusocracy
Anusocracy's picture

And the public sector is growing but brain dead.

A recipe for success.

Mon, 01/28/2013 - 00:40 | 3190461 FreeMktFisherMN
FreeMktFisherMN's picture

But, but, Obama says 'the private sector is doing fine.' And besides, 'they didn't build that.' /s

Sun, 01/27/2013 - 21:40 | 3190012 yogibear
yogibear's picture

And the public unions can fix it with more taxes, tolls and fees, which just about doubled in many cases.

No wonder public union jobs are the most sought after. 

Sun, 01/27/2013 - 22:20 | 3190123 otto skorzeny
otto skorzeny's picture

30 years ago only retards worked for the govt-now those are the most sought after jobs(but still the retards seem to have those jobs)

Sun, 01/27/2013 - 22:31 | 3190151 Anusocracy
Anusocracy's picture

Idiocracy grows on the backs of public workers.

Sun, 01/27/2013 - 21:40 | 3190015 tony bonn
tony bonn's picture

this article will survive the year as one of the top 20....

Sun, 01/27/2013 - 21:43 | 3190018 ItsDanger
ItsDanger's picture

Think its bad now?  I guarantee it will get a lot worse.  Wait until more software efficiencies are gained and robotics reaches practical rollouts.

Sun, 01/27/2013 - 22:29 | 3190144 Anusocracy
Anusocracy's picture

Wait until government gets bigger and more controlling.

Government is fully capable of destroying the efficiencies that technological advances create.

Over the last century, the work week went from about 60 hours for one family worker, to 40 hours for one family worker, then to 40 hours each for two family workers. After creating the need for two workers in a family, government is now destroying their jobs. I would hazard a guess that at this time, a livable work week should be about twenty hours.

Instead, thanks to government, people are living in poverty working twenty hours.

Sun, 01/27/2013 - 21:46 | 3190025 moneybots
moneybots's picture

"Employment is dead because all the jobs were shipped overseas."


Meet Baxter, a robot.


Technology has been eliminating jobs.  Smart electric meters have replaced meter readers where i live.  Automated warehouses.  Online bookings for travel.  Self checkout at the super market. 

It all starts to add up.

Sun, 01/27/2013 - 21:57 | 3190052 espirit
espirit's picture

Meet SkyNet1 defense drone.

Designed and built to protect robotic infrastructure from carbon based lifeform intervention.  Armed with the latest weaponry not currently available to other life forms.

Yep, I see it. 

Sun, 01/27/2013 - 22:19 | 3190121 willwork4food
willwork4food's picture

Meet carbon based construction worker. Designed and trained for decades to address quality and efficiency, until everyone under the sun decided they can get a $9/hr employee, when cost mattered more.

See carbon based construction worker begin to die a slow death.

Sun, 01/27/2013 - 22:26 | 3190138 DR
DR's picture

No robots here...just cheap labor. Thanks NAFTA!



Volkswagen to Produce Golf for Americas at Mexican Plant


"“With its existing infrastructure, competitive cost structures and free-trade agreements, Mexico is the ideal location to produce the Golf for the American market"

Mon, 01/28/2013 - 02:17 | 3190582 401K of Dooom
401K of Dooom's picture

Why are they producing their Golf's in Mexico?  I thought it was currently under a state of war due to narcotic demand? 

Mon, 01/28/2013 - 10:23 | 3191111 Oldrepublic
Oldrepublic's picture

Mexico is not as bad as the press says. I was impressed with many aspects of Mexico. Not so dangerous. Mexicans down there are not to be compared with the ones in the US.  

Mon, 01/28/2013 - 11:51 | 3191404 QQQBall
QQQBall's picture

Yes, local supermarket has done away with "Quick Check" line forcing you through the scanners. They have one attendant for 4 to 6 scanners.  Pretty soon, you will just roll the cart under a transponder and it will automatically bill your account the full amount of the purchase. Fresh & Sleazy has no checkers and their scanner work very well.

Sun, 01/27/2013 - 22:06 | 3190067 Caviar Emptor
Caviar Emptor's picture

The economy is going Bi...Biflation. Employment won't pick up because of the cost basis as the article states. Solution? Lower wages and benefits, part-time employment. Disposable income vaporizes. And so does demand. And hence the deflation side of Biflation. But cost basis of jobs rises. Hence the inflation side of the coin

Mon, 01/28/2013 - 10:29 | 3191140 SWRichmond
SWRichmond's picture

+1. This is the recipe for the continuing destruction of the politically troublesome middle class. Those of us who lived through it in the 1970's recall vividly; it was named "stagflation" at the time, but the effect is the same: everything you need costs more, the value of your labor decreases, everything you already own becomes less valuable in real terms.

In other words, theft of labor and real property by the central bank.

Sun, 01/27/2013 - 22:00 | 3190070 Jack Burton
Jack Burton's picture

If only we could get back to the job creation explosion during the 8 years Bush presidency. Obama took millions of new jobs and flushed them down the toilet. The Bush tax cuts were proven job creators as business used the increased profits to hire and expand to service a public flush with cash from their tax cuts. Obama has squandered the great job creation decade of the 2000's.

Channeling Million Dollar Bonus.

Mon, 01/28/2013 - 07:43 | 3190808 Bobbyrib
Bobbyrib's picture

The job creation explosion had nothing to do with the housing bubble either. Don't look at housing related industries to see what the employment figures were. /sarcasm.

Sun, 01/27/2013 - 22:13 | 3190088 ZeroAvatar
ZeroAvatar's picture

CHS said "....opportunities for organic expansion are few.".........."Number one is a business with strong demand for one's products or services. In a developed world with too much of everything except energy, that is no small challenge: the world is awash in over-capacity in every field except niche industries such as deepwater oil rigs."


I don't think Charles expounded enough on the 'organic expansion' part of the thesis.  As icanhasbailout said, ""real GDP growth is not translating into full-time jobs" because that GDP growth ain't real."  He's right.....printing and borrowing fiat dollars to sustain the growth paradigm through debt is not 'organic growth'.  It's rot, plain and simple.  Rot on the inside. 


  Everything that printed- money GDP has gotten us for the past 4 years was all for nought.  All we have to show for it is a system that is rotten on the inside.  This rot is growing daily, and will consume the economy.  We need ORGANIC growth, not rotten fiat printing tricks.  There has been no ORGANIC GROWTH.

Sun, 01/27/2013 - 22:11 | 3190096 Slightly Insane
Slightly Insane's picture

I am a small business guy, self employed.  What is misunderstood is that .... if you're in a service industry, you've got to hire an accountant (tax rules too complicated), purchase general liability insurance (most folks require it), along with paying Unemployement Insurance (in Illinois every month even though the self employed is never unemployed ... he, he, he), Workman's Compensation Insurance (if you have 1 employee other then self), pay an attorney for incorporation (mine was $700 quite a few years ago .... still pay a franchise fee $100 juice to the state every year), still pay for health care (although now, due to the new law, I will be omitting it and paying only a penalty), Pay both sides of the social insecurity and medicare taxes, also pay the state income taxes (5% thanks to the communist democratic party in Illinois).  Then to work in many of the communist suburbs, one has to pay for a contractors license (good for 1 year or less ... $200), not to mention permitting fees.  If you're lucky enough to make some serious dough, then you can pay the feds some income tax.  Of course there is the rent, the gas, electric, phone, and advertizing bills ..... and if you're lucky, you can fund a retirement account.  It is absolutely thankless, but at least I can sort of ... avoid working for some assholes.  Then of course there is the matter of getting paid after the work is completed.  Then we get an ahole in the feral gubermint who say's "you didn't build that"!  All I can say is, fuck you, yeah I did mofo.  (I do fabrication and engineering).  I am slightly insane because of all the fucking bullshit that I have to put up with, most of which is caused by faceless stupid asshole regulators that ain't got a clue.

Sun, 01/27/2013 - 22:23 | 3190127 trav777
trav777's picture

the problem here is that you cannot see through your racism.

It is not people like you who built this country, it was women and minorities.  You can check down the list of all the important pieces of infrastructure that women and minorities developed and built.  The list of inventions by both is humongous.  This is why we should spend all of our time celebrating these groups.

Sun, 01/27/2013 - 22:25 | 3190135 otto skorzeny
otto skorzeny's picture

that's why Dee-troit,Atlanta, and sub-Sahara Africa are so fuckin' well run

Sun, 01/27/2013 - 23:05 | 3190221 joego1
joego1's picture

I'm a minority fuck you.

Sun, 01/27/2013 - 23:05 | 3190222 joego1
joego1's picture

I'm a minority fuck you.

Mon, 01/28/2013 - 07:24 | 3190788 Slightly Insane
Slightly Insane's picture

trav 777 - I am not a racist.  I am NOT a Communist.  It IS PEOPLE LIKE ME THAT BUILT THIS COUNTRY!  My kind was referred to as "the Mick's".  Since this countrry is comprised of a bunch of folks that no one wanted around (misfits), we are largely all "not from here".  I suppose one would have to exclude the American Indian, as this was his country.  Since I am not an American Indian, and a second generation Mick, then I am no different then any other group, or race represented in the US.  You obviously wish to pander to the lowest common denominator, and play the race card.  (Communist activity to generate division). Get over it, and get an original thought.  I celebrate one thing .... and that's work.  I don't need parasites like you getting in the way.  Go out and "build something".  If you're incapable of that, then get out of the way!

Mon, 01/28/2013 - 07:25 | 3190791 Slightly Insane
Slightly Insane's picture

trav 777 - I am not a racist.  I am NOT a Communist.  It IS PEOPLE LIKE ME THAT BUILT THIS COUNTRY!  My kind was referred to as "the Mick's".  Since this countrry is comprised of a bunch of folks that no one wanted around (misfits), we are largely all "not from here".  I suppose one would have to exclude the American Indian, as this was his country.  Since I am not an American Indian, and a second generation Mick, then I am no different then any other group, or race represented in the US.  You obviously wish to pander to the lowest common denominator, and play the race card.  (Communist activity to generate division). Get over it, and get an original thought.  I celebrate one thing .... and that's work.  I don't need parasites like you getting in the way.  Go out and "build something".  If you're incapable of that, then get out of the way!

Sun, 01/27/2013 - 22:23 | 3190129 otto skorzeny
otto skorzeny's picture

I like the state of IL-hate the fuckers that run/work for the govt- but I have the feeling that IL or CA will unravel first and I'll be at ground zero for the Big Show

Sun, 01/27/2013 - 23:35 | 3190309 phaedrus1952
phaedrus1952's picture

While California is an incredible place in so many ways, it may very well lead the way in the coming implosion.  Few weeks back a Highway patrolman retired with, if IRR, 400 G's walk away money in accrued sick/vacation benefits along with a 200 grand FOR LIFE retirement (that's 4 grand per week for you state school grads).  Putting aside any judgemental input, this state of affairs is clearly unsustainable.  What cannot be sustained, will not be.

Mon, 01/28/2013 - 00:20 | 3190415 Missiondweller
Missiondweller's picture

This state school grad and CA resident agrees with you.

Mon, 01/28/2013 - 02:07 | 3190568 slightlyskeptical
slightlyskeptical's picture

I'm all for unions and benefits, but these packages are way over the top. Anyone who spends their life in public service can do this if they play their cards right. We need to do away with retirement benefits on overtime, make vacation and sick pay use it or lose it and completely eliminate the secondary retirement packages these people are able to accrue. Max benefit - average salry through career. With social security and their own savings they will still have it better than their working years, which is more than fair.  My neighbor was a firefighter and retired last year to a $750,000 lump sum and $175,000 a year. Went on no more than 3 calls the last dozen years. Falling down drunk through most of them. Lucky bastard!

If only we had known as kids how rich we could get worrking for the government, more of us would have followed our dreams to be a firefighters, paramedics, policeman and even teachers. 

Mon, 01/28/2013 - 02:23 | 3190595 Pareto
Pareto's picture

Still not accpetable.  Sorry.  I can't get past the idea of somebody that does not serfvice a market need (and therefore, is not accountable to nobody for anything), can get paid more than I do, and retire better than I might ever hope to.  Its shitty economic calculus and has fuckall to do with productivity or economic value.  Don't get me wrong, I respect the disciplines/careers you note, but, there has to be some economic connection between productivity and compensation.  And the idea that you don't have to save for retirement is fucking nonsense.  Its arrogant and immoral to expect market participants to pay other people's way until their death, while they struggle to look after their own.  Its fucking asinine, and it instills a sense of entitlement and irresponsibility.  Capitalism requires that everybody play by the same rules.  If some are more equal than others, then fuck it!  I'm out.  See?  thats what happens when people get looked after at other people's expense.  Pretty soon nobody looks after anybody.  Thats socialism.

Sun, 01/27/2013 - 23:03 | 3190217 joego1
joego1's picture

Im with you brother but I ditched my last employee got bless him. Fuck that gov!

Sun, 01/27/2013 - 23:42 | 3190321 sitenine
sitenine's picture

'ditched my last employee'? - wow - it's assholes like you who that can really turn people off. Frankly, I think you're lying anyway - An honest employer would say that he "regretfully had to let his last employee go." But whatever, I just wanted to note here that I think you're an asshole.

Sun, 01/27/2013 - 23:36 | 3190276 sitenine
sitenine's picture

@ Slightly Insane - You sound perfectly sane to me. Of course, in a nation run by folks who may not be so sane makes us all feel like we're the ones living in a parallel universe. From time to time. I'm with you 100% on self employment, and I admire you for playing a game that actually pays honest income regardless of what your trade may be (even though the odds are stacked so heavily against us). Too many have forgotten what took us so far, and it is sad that some seem so willing to give that up. Hang in there friend. You are not alone.

Mon, 01/28/2013 - 02:32 | 3190607 401K of Dooom
401K of Dooom's picture

Mr. Insane, your comments would be perfect for an aspiring politician.  Thank you for the great diatribe!

Sun, 01/27/2013 - 22:29 | 3190147 dolph9
dolph9's picture

The fossil fuel powered machines rule.  We've made ourselves dependent on them.

Many here continue to rail against the welfare and disability cheats.  And to a certain degree I agree.

But think about it logically...suppose you have government subsidized shelter, food, and cable and internet porn.  What incentive do you have to work?  The only incentive you have is if you happen to have some skill, and you actually want to go out there and practice it.  Otherwise, the free Big Mac wins every time.

And it actually doesn't cost alot...just the bare minimum needed to get people by.  And then some will get more and can get obese.  And these people aren't really doing much of anything other than the occasional trip to Wally World or Mickey D's.

In other words...welfare is LESS EXPENSIVE than jobs.  As long as this is true, there will be no end to welfare.

So welfare will rise and rise until it bankrupts every last working person.  That's the endgame.

Sun, 01/27/2013 - 22:35 | 3190160 mess nonster
mess nonster's picture

ILCA always the test states. Now testing how insolvency can benefit totalitarian motherfucking communist State control of every fucking thing possible.

Anybody that can swing it should figure out how to live so low and invisible that no-one takes notice.

Warm and dry- check.

Food. Check

Clothes. Check

Excess income that puts me on some communist tax radar, who the fuck needs it?

The Soviet Union collapsed after three generations of no-one doing jack shit except get drunk. And that was during a period of cheap, cheap energy-If everyone just quits and stays drunk,  it will take this country five years to disintegrate and then we can start over. Don't pay attention to Anonymous- that's just the CIA, trying to start trouble. Opt out, find a nice dry hole in the ground, make some moonshine, and let the system choke on its own shit.

Sun, 01/27/2013 - 23:00 | 3190206 joego1
joego1's picture

Hmm, I wonder if I can distill shit?

Sun, 01/27/2013 - 22:47 | 3190180 Tom Green Swedish
Tom Green Swedish's picture

I'm getting real sick of this trashing USA crap.  Most of the people who are unemployed are completely unqualified to do anything. It's not the companies fault they are working with a pile of garbage.  Do you want to hire somebody who's only qualifications are posting pictures on facebook and getting plastered? We have almost no inflation here



Sun, 01/27/2013 - 22:56 | 3190198 joego1
joego1's picture

The only qualified to be employed is me me me me....

Sun, 01/27/2013 - 23:02 | 3190214 alfbell
alfbell's picture

As Martin Armstrong explained, it is really all about CONFIDENCE and it's pendulum swing. After the 2007 crisis the public confidence pendulum swung towards the government: the government will save us and fix the system. When the pendulum swings in this direction it allows government to get bigger, exercise more control, intervene in your personal and business affairs, move towards totalitarianism, etc.

There will have to be a radical drop in the private sector's CONFIDENCE in the government for the pendulum to swing the other way which will then bring about reform, smaller government, reinstatement of freedoms and liberties, reinstatement of rule of law, etc. etc.

If reform is correct and TRUE instead of false data is utilized, we could put an end to the business cycle (boom and bust) and rid ourselves of inflation and other created negative conditions in our society and economy.

It will take some major failures and crises in the public sector/government before that will ever happen. Wonder how long we'll have to wait? 10 years? 20? 50?

Mon, 01/28/2013 - 02:08 | 3190569 Pareto
Pareto's picture

The pendulum doesn't swing on its own and confidence in government has little to do with the business cycle.  The Federal Reserve creates the business cycle as does government spending.  By any measure, government has failed at accomplishing anything, and especially has failed at bringing resolve to the financial crisis.  But, this should come as no surprise since bailouts beget bailouts.  If bailouts and government spending actually worked, or, added to GDP such that for every $ of government spending, yielded, $1.25 in GDP growth, wouldn't that be a permanent line item on the government's income statement.  Fact is, it doesn't work, because it cannot work, because by design, in order for the government to claim "value creation", it must first confiscate value from somebody else.


Not sure what you mean by "reform being correct and TRUE".  If by reform you mean getting government out of the economy, maybe.  If however, you mean "tweaking government here and uh.  Expect no substantive change in the course of increasing economic imiseration.

Sun, 01/27/2013 - 23:06 | 3190223 alfbell
alfbell's picture



We the people, Americans, citizens, producers, voters, tax payers (or whatever we call ourselves) have been...



Sun, 01/27/2013 - 23:10 | 3190231 joego1
joego1's picture


Sun, 01/27/2013 - 23:49 | 3190330 earleflorida
earleflorida's picture

yesterday's word for today's, many a tomorrow:  "inshoring" ; [raft fill'd with mandarin speaking americana expatriates ]

Note: too old for reunification and [un?]suitable for front-line infantry? great candidates for welfare indoctrination...yes-- no? 

and, 'obi' just keeps on singing, 'old man river' to michele's`bell-- banjo a strummin... we jus keep rollin em along...

Mon, 01/28/2013 - 00:36 | 3190446 q99x2
q99x2's picture

Yep that is the way it is. Perfect for moving the Chinese in to manage once the US is in the same condition as Greece. Then the elite can live a happy go lucky life in private cities around the world. That is if they can stay alive through the revolution and/or keep the military from turning on them.

Mon, 01/28/2013 - 02:25 | 3190509 sitenine
sitenine's picture

What? Keep the military from turning on them? Are you serious? Private cities, one's that try to live beyond the reach of federal government, will be crushed mercilessly. Just ask Randy Weaver or David Koresh how it worked out for them - oh, that's right - they're dead.

Mon, 01/28/2013 - 01:55 | 3190558 slightlyskeptical
slightlyskeptical's picture

How do we fix it? We need to pay people more and we need to make sure the productive capitalists get rewarded.  The current balance of wages, prices, profits isn't working out very well unless you have monopoly power and can kill supply to maintain pricing. There is a equilibrium of living wages, prices and profits that we need to get to in order to get the economy running smoothly again. 

Given our fiscal situation and the need for inflation to get out from it,  to get wage, price, profit equilibrium, wages would need to rise dramataically, prices would need to rise somewhat less dramatically,  In order to spur internal demand and thus restart domestic manufacturing, we would need to take a protectionist stance on foriegn trade - I.E. we can't import anything for less than we can produce it ourselves.

Solution = common sense


Mon, 01/28/2013 - 07:41 | 3190803 Slightly Insane
Slightly Insane's picture

In my opinion, this cannot be fixed.  The Guberment has a monopoly on force.  It is this "force" that keeps me paying taxes, and things like "unemployment insurance".  The game is so rigged in favor of the parasites that there just does not seem to be any way to clear them out of the way.  I think the solution, if it may be called that is "John Galt".  Takers out number makers.

Give up your 2nd Amm'dmt rights, and you can call yourselves "slaves, and prisoners".

Mon, 01/28/2013 - 23:10 | 3193670 hooligan2009
hooligan2009's picture

fixing it involves rolling back the clock with as much intent as the clock was rolled forward ot this point,

that is...fiscal surpluses, less regulation, closing of borders, forced repatriation of capital employed overseas, direct education to high value activites post graduation, lower health costs, clamping down on corruption and drugs, reducing the size of the military to one third of its current budget, making "spin" a crime, utilizing common sense at all levels of government, alienating communist regimes (including China), refusing to allow imports of products without reciprocal labor laws, Fed fund rates of 5% to reward people who save and make people think twice about living beyond their means. 

the ist goes on and on. it is not impossible. touch of national pride never hurt anyone. governments that only give their voters their problems back in their faces will depress the voters. 

one project i would suggest is taking 400 billion from the defence budget and firstly, eliminating crime/corruption and secondly, rebuilding infrastructure (including resiting unemployed people in brand spanking new cities). 

others will have more and better ideas, but one thing is for sure, it is not only possible but compulsory.

Mon, 01/28/2013 - 02:40 | 3190618 401K of Dooom
401K of Dooom's picture

Mr. Durden, great column.  This explains a lot about what is going on.  I would add that there is the extra complication of appreciating real estate prices.  When I was living in Massachusetts (there are some nice people there, unlike the Kennedy lovers), all of the properties were appreciating in value without regard to their real net worth.  The average cost of a home in that state is up to 400k-500k and that's a starter or first family home.  What I see happening is the local govt's trying to get around prop 2and a 1/2 is to boost up the assessed value of the property and collecting more revenue from that.  This is done without regard to the value or the location of the property.  I have a friend who's father lives in Lowell and the street he is on once had a big-time drug seller.  Yet her father's house is assessed at mid-six figures.  No one has done an analysis of over-appreciated property values versus unemployment or other factors in this depression.

Mon, 01/28/2013 - 03:17 | 3190649 nicoacademia
nicoacademia's picture

head and shoulders with snapped neckline on the Usually Work Fulltime chart.

Mon, 01/28/2013 - 03:39 | 3190663 ebworthen
ebworthen's picture

Time to end financial engineering and re-institute labor uinons and livable wages and benefits (and sound money and the rule of law).

Bleed the banks and corporations, the new plantations of the 21st century.

Kill big government and restore the constitution.

End the FED!

Mon, 01/28/2013 - 12:19 | 3191526 QQQBall
QQQBall's picture

Clueless... other than sound money. Just raise the min wage to $50/hour and voila! Hahhahahha!

Mon, 01/28/2013 - 05:11 | 3190710 The Swedish Chef
The Swedish Chef's picture

Don´t worry, energy won´t be cheap for too long and sooner or later the last illiterate Chinese farmer has moved to the city and his new "well paid" job. It might hurt right now but once oil has a price closer to it´s real value and Chinese start demanding real wages, the tide will start turning.

Mon, 01/28/2013 - 07:39 | 3190801 Spigot
Spigot's picture

There are many dynamics at work which seem to spell "doom". One dynamic is the mushrooming of governmental confiscation through taxes, mandates, regulation and inflation. A close cousin to that is the rapid expansion in wealth transfer from the broader populous to the very few at the very top, and that classes agrandizement at the expense of the many.

Another dynamic is the destruction of businesses whose assumptions and business models predated the 2007-8 crisis period, and the subsequent flatlining of consumer debt increases. Adding to this that .GOV has decided in their infinite wisdom that devaluing the currency (and the consequential raise in inflation) would "make up for the plateau in private consumption", when in fact it (inflation) continues to eviscerate the middle class so that they can NOT increase consumption, there by creating a destructive feedback loop that drives the middle and lower classes into greater dispair. (not a recipe for consumer confidence)

The world has changed. Your business and way of doing business has to change as well. You have to reinvent. No you can not do that well if you are carrying huge loads of costs, debt or dependencies. Yes you can do that if you are by yourself. IMO there are a lot of new, 1-3 person businesses which are flying under the radar figuring out how to reinvent themselves and recycle parts of other businesses into their own business.

For my business I just bought a $50,000 pc of equipment for $200 at auction. I am gutting it and selling the parts and should be ahead just on the parts sales. I will use some of that money to refit the machine to my needs. I will use open source software to drive the machine. With this machine I will be able (by myself) to produce in 1 or 2 days 150% of what I produced in 2012. I will then use all the saved time to focus on sales and establishing new markets in other parts of the country. I will never hire anyone. I will hire out my needs to other 1-3 person businesses. I will eventually sell this business but only after it has taken me were I want to go, and no further.

The web based integrated manufacturing, inventory and sales applications I will be creating to support this business will become a product suite that I lease to other businesses for ridiculously low monthly fees. The server farm I will be creating will provide cloud services for other businesses. Everything becomes another business, and every business is up for sale, or partnering. But there will be no employees. I can't afford them unless they are as innovative and resourceful as I am. But then I would expect them to leave and start their own businesses, so why bother?


Mon, 01/28/2013 - 07:45 | 3190809 Slightly Insane
Slightly Insane's picture

Spigot .... pray tell, what was the $50K equipment?  (CNC - 3/4 axis lathe, mill, or edm?)

Mon, 01/28/2013 - 17:00 | 3192581 Spigot
Spigot's picture

See my reply to you below.

Mon, 01/28/2013 - 23:00 | 3193630 hooligan2009
hooligan2009's picture

You are Spartacus. Well done sir!

Mon, 01/28/2013 - 08:05 | 3190820 toomanyfakecons...
toomanyfakeconservatives's picture

Thank you for stating the obvious.

Mon, 01/28/2013 - 11:16 | 3191274 Gimp
Gimp's picture

Guys, you know the old saying:

" If you have no plan for yourself, someone else does"   = slave laborer.

Mon, 01/28/2013 - 12:02 | 3191457 JayKitsap
JayKitsap's picture

Yes, become self employed fixing Legacy Equipment or finding ways to do more with current assets.  So much now is disposable, the equipment that predates that has a lot of value because it continues to work.

Our .GOV keeps adding regs and costs to employees and employers, no viable reason to expand, more reason to become smaller and more profitable.  Just O'care adds $5k to the cost of a $20K worker.  If their work before was just breaking even, somehow he needs to make 20% more return to stay even.  Not 20% more revenue because only the net matters.

Oh, everybody with US content will need to raise prices to cover those added costs, making imported goods relatively cheaper.  Duh - Ocare will shift all the more production overseas or to be made by robots.


Mon, 01/28/2013 - 12:23 | 3191513 QQQBall
QQQBall's picture

Read "Your Money or Your Life" & "Cashing in on the American Dream, How to Retire at 35" and perhaps the "Millionaire Next Door." These are kinda "how to" books, but really philosophy books.  After reading "YMorYL" in the 1980's, I cut my expenses in half and really started living. My opinion - you have to be the boss - figure 80 hrs a week and go the extra mile. and yes, margins are getting really squeezed, maybe this time will be different but in the past, the people who make it through the rough times lick the gravy on the other side. Go check the books out at the library. It does seem tougher now; when I graduated from college I had no worrires off employment.  In 1984 or 1985 I made $75k in 9 months with commissions.. I quit and went to work at my current profession and started at $6/hour - slept on a buddies couch for 3 months and now I own my "job." It is harder now, but I love what I do and have no plans to reitre. I am tempted to buy a really nice home, but once you get out of the matrix, the idea of a mortgage is not so satiisfying and prices are too high for my taste. It is a digital world my daughter works for me remotely as does my sec'y. Sec'y is 2000 miles away and daughter is moving to UK. They work as IC's, which they are.... I am not saying anything is easy, but you have to adapt, live below your means, save and invest... and as to employees - screw that - ObomberCare just made them less attractive...Try to be "value added" to your Clients - I have lunch every year with Clients just to show my face and I never discuss business, always there family and now we each know what our kids are studying, what they like and dislike, etc... Its easy to fire a name, but harder if they know you... I am not a genius, but I have servived for 30 years...  I have borrowed & invested when rates were high, not low.Nothing pays like patience.

Mon, 01/28/2013 - 22:59 | 3193623 hooligan2009
hooligan2009's picture

you are spartacus! well done sir.

Mon, 01/28/2013 - 17:04 | 3192576 Spigot
Spigot's picture

Slightly Insane,

You are on the right track. Its what is called a Liquid Handling Robot, pc of lab equipment. I am refitting this to be an automated filler for my product line. Replacing the proprietary controller and drive boards with generics, replacing a few motors. Will use EMC2 (Linux) to control the movements and script the runs. One press of the button and off she goes. Precision filling.

It will be salable outright or I can lease it as well to others or fill other people's products. I can also start a business refitting these machines.

Putting this into perspective, a contract company would require me to commit to a minimum run of 8,000# of product, with lead times of 6-9 months. Unknown what the cost would be since we never got that far in the conversation. With this machine I can fill huge #'s of bottles a day, am far more flexible, can manage my own inventory as needed (already doing that). So, where's the "economy" in this kind of "economy" of a small guy buying services from a large guy whose business model requires this type of crap?

Obviously I am an inventive and handy sort. If other business owners are not so handy, then...they are living in the past, and will fail. They sat around watching TV when I was learning and practicing. They bought big boy toys when I was investing in machine shop tools. They were reading the news paper when I was reading ZeroHedge. You get the picture.

What I am saying is that there IS an economy being born in the fires of this depression, but it doesn't look anything like the fat assed businesses of yesterday. These small companies are lean, mean and undercutting the established companies by keeping a death grip on costs, re-using, refitting, inventing instead of buying over priced new equipment, etc. If you are reading ZeroHedge you are probably one of these.

Mon, 01/28/2013 - 23:13 | 3193683 hooligan2009
hooligan2009's picture

yep, those are the we got any leaders who can transform the current shit into gold?

or is it down to this: 

Bernanke: I have had it with Charles Hughs SMith. He won't stop making us look stupid.

Pentagon: We have an app for that (aside to colleague...engage the drone!) 

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