Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18
The Value of Bitcoin - 11th Jul 18
America a Nation Built on Lies - 11th Jul 18
China, Asia and Emerging Markets Could Result In Chaos - 11th Jul 18
Bullish Gold Markets in the Big Picture? - 11th Jul 18
A Public Bank for Los Angeles? City Council Puts It to the Voters - 11th Jul 18
Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - 11th Jul 18
Argentina Should Scrap the Peso and Dollarize - 11th Jul 18
Can the Stock Market Close Higher For a Record 10th Year in a Row? - 11th Jul 18
Why Life Insurance Is A Must In Financial Planning - 9th Jul 18
Crude Oil Possibly Setting Up For A Big Downside Move - 9th Jul 18
BREAKING: New Tech Just Unlocked A Trillion Barrels Of Oil - 9th Jul 18
How Trade Wars Penalize Asian Currencies - 9th Jul 18
Another Stock Market Drop Next Week? - 9th Jul 18
Are the Stock Market Bulls Starting to Run? - 9th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Britain's Jobless Economic Recovery as UK Unemployment Hits 2.5 million

Economics / Unemployment Dec 16, 2010 - 12:12 AM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleThe latest UK unemployment data caught the mainstream press and academic economists by surprise by showing a rise of 35k to 2.5 million (7.9%) for the three months to September 2010. UK unemployment is particularly hitting young people hard which risks creating a lost generation of increasingly angry youth (19.8% unemployed), as well as 1/2 million jobs expected to be cut from the public sector over the next 2 years, many of whom will find it difficult to adapt to the private sector jobs market.


The fundamental flaw in the governments employment policy and OBR forecast for UK unemployment to hit 2 million by 2015 is the fact is that as many as 80% of the new jobs created by the private sector will go to E.U. migrant workers as identified in the UK unemployment forecast (01 Jul 2010 - UK Unemployment Forecast 2010 to 2015 ). The UK unemployment data is line with the forecast trend for UK unemployment to start rising in September and target a trend to 2.9 million by mid 2013 as illustrated by the below forecast graph.

The ongoing euro-zone debt crisis and resulting economic depressions in PIIGS economies is resulting in a huge number of migrant workers entering the UK workforce from especially Ireland, Greece, Portugal and Spain as identified recently (22 Nov 2010 - Ireland Bailout Consequences for Britain, Portugal Next? Stock Market Correction Over? ). Over 100,000 have migrated from Ireland alone over recent months which is set against total private sector job creations running at an average rate of about 30,000 per month, which illustrates that 80% of the new jobs are not going to be filled by UK unemployed citizens.

The government in part is aiming to address the migrant workers issue by attempting to force those on benefits that can work but chose not to work off of benefits, although most of the measures will not be implemented for several years.

The best response from job hunters to the weight of a rising trend in UK unemployment for several years would be to start thinking outside the box and contemplating self employment / business startups as the coalition government has promised to foster a more business friendly environment by cutting red tape.

Earnings Failing to Keep Pace with Inflation

Meanwhile those that are employed continue to be squeezed by average increasing by just 2.2%, which is well below even the manipulated official inflation CPI measure at 3.3%, and half the rate of the more recognised RPI at 4.7%, which actual real inflation of 6.2% triple average earnings.

UK Inflation August 2010

Inflation is a stealth tax that is being used by the Government and the Bank of England to a. Reduce the budget deficit (eroding purchasing power), and b. funneling tax payers and savers cash onto the balance sheets of the bailed out banks as savers are in receipt of interest net of tax at half the CPI rate and similarly average workers pay rise is near half the CPI and far below the RPI inflation measure of 4.7%.

Protect Your Wealth

At the end of the day savings/ capital taxes PLUS inflation are a means of taking accumulated wealth from the haves and redistributing to the have not's. Over the long run inflation ensures that those with accumulated wealth will ultimately lose most of it to the state (unless their funds are protected against UK inflation and taxation).

Unfortunately the coalition government has accelerated the trend of stealth theft by withdrawing the National Savings Index Linked Certificates in June, that allowed the people of Britain to at least protect upto £15,000 (per issue) of their life time accumulated savings against RPI. Whilst also declaring a switch in annual indexation from RPI to CPI which means under reporting UK inflation by 1.5% against RPI and 3% against real UK inflation (6.2%).

The Bank of England is going to keep printing money which is a positive for asset prices such as stocks. For investors the strategy remains to invest in inflation wealth protection and growth such as agricultural commodities, gold, silver, metals and mining, TIPS, emerging economies such as China, India, Russia, Chile, Brazil, and developed economies such as Australia and Canada as their appreciating currencies will protect your investments purchasing power in sterling as covered at length in the Inflation Mega-trend ebook (FREE DOWNLOAD).

Comments and Source: http://www.marketoracle.co.uk/Article25039.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Raj Guram
22 Dec 10, 11:42
Quiet

Hi Nadeen,

Why so quiet recently, I hope its cos your working on the house price edoc :-)

Cheers

RG


Nadeem_Walayat
22 Dec 10, 13:17
analysis

I have 4 draft analysis to finish, next will be on interest rates.


Raj
22 Dec 10, 17:35
Merry Christmas

Have a merry christmas and a happy new year :-)


UnaDiMehor
23 Dec 10, 06:26
Inflation

First of, great work! Always a pleasure to read.

Would like to ask you, about your key thesis, of inflation.

The common deflation arguement, of 54 trilion in US debt, record private sector debt to GDP ratio's, mean deflation is likely.

Having read your work, one of the main counter arguements would have to be "derivative2 only the tip of the iceberg.

Could you explain/quantify this please?


Nadeem_Walayat
23 Dec 10, 11:34
No Deflation

Hi

The inflation mega-trend ebook (FREE DOWNLOAD) explains why debt deleveraging deflation is a red herring, and that the deflation argument is nothing more than propaganda expoused by vested interests so that they can continue the inflation stealth theft of wealth as a core trend of the fiat fractional reserve banking system.

So academics and the mainstream press that expouse always imminent deflation are either in the back pockets of the elite or clueless morons, because this is what so called a decade of deflation looks like in the US -

UK So called deflation -


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules