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The Real Reason Why U.S. Unemployment Will Remain High

Politics / Unemployment Dec 04, 2011 - 10:01 AM GMT

By: Mike_Stathis


Diamond Rated - Best Financial Markets Analysis ArticleIt took quite a long time for Washington to finally concede something that was apparent; the nation’s excessively high unemployment rate would remain elevated for several years. But their admission has come with a twist.

Instead of pointing to the true reason for this demoralizing reality, establishment economists have offered some ridiculous excuses to account for America’s persistently high unemployment rate. The purpose of this propaganda campaign is to place blame on unemployed workers, rather than address the misguided economic policies established by America’s fascist government.

Why is it important to properly identify the source of persistently high unemployment? 

Only by properly identifying the real reasons for the elevated and chronic level of unemployment will adequate solutions be possible.  It follows that if the true reasons accounting for this worrisome trend are not identified and acknowledged, America stands a good chance to lose much more than a decade. We are talking about the continued and permanent decline in living standards for the middle- and working-class. 

Let’s look at some facts.

• There have been between 5 and 6 unemployed Americans for every job opening since mid-2009, suggesting a shortage of jobs. This ratio is roughly double what it was in the last recession and reflects, in large part, that job openings are one-fourth lower now than they were in the last recovery.

• In the first 12 months of this recovery there were 32.0 million job openings, 10.0 million fewer than the first 12 months of the prior recovery, one known for being a jobless recovery.

• The shortfall of job openings in this recovery compared to the last one is pervasive: it is evident in nearly every sector including labor intensive service industries such as hospitality, entertainment, and accommodation. Construction is responsible for just 6% of the overall shortfall in openings in this recovery compared to the last one.

• Layoffs during the early stages of this recovery are comparable to those in the prior recovery, and cannot explain high unemployment.

In attempt to identify the cause of the persistently high unemployment rate, two arguments being debated by America’s highly controlled and delusional opinion-makers, otherwise referred to as establishment economists.

Let’s take a look at each of these misguided viewpoints. Establishment economists working for the left-wing contingency of America’s fascist government claim that the high unemployment rate is merely a consequence of cyclical unemployment, which is related to changes in demand that occur through business and economic cycles. During the first two years of the Obama presidency, the cyclical unemployment argument was unanimously accepted.

In contrast, establishment economists working for the right-wing contingency of America’s fascist government claim that the persistently high unemployment rate seen in the U.S. is due to structural factors. Thus, according to these hacks, the lack of growth is due to what is known as structural unemployment. More recently, the structural unemployment argument has been disseminated for the sole purpose of increasing the momentum of the Republican Party going into the 2012 elections. 

As you will see, both arguments are wrong. Each argument has been offered as the only explanation to account for the persistently high unemployment rate in order to distract Americans from the real cause. Without surprise, it turns out that both arguments support the long-term trend of boosting corporate profits at the expense of working-class livelihoods. Thus, both arguments are supportive of America’s fascist government, whether we are talking about democrats or republicans. [1]

The table below represents the official data compiled by economists at the IMF (as well as a large contingency of establishment economists in the U.S.). They have used this data to conclude that most industries are facing unemployment due to structural issues. As you can see, they have concluded that most job losses have been due to structural factors.

Structural unemployment is thought to occur due to mismatches between the skills of the labor force and the skills required by employers. For instance, in order to explain the jobless rate, economists who advocate the structural employment argument state that displaced workers lack adequate skills, their skills have deteriorated, or their skills are not applicable to the industries that are expanding.

However, there is no evidence that can support the claim that structural unemployment has been largely responsible for the persistently high unemployment rate. In fact, data from employer job openings, layoffs and hires actually contradicts claims of unemployment due to structural issues. 

If we are to accept the premise of structural factors as a primary component of the persistently high jobless rate, it is important to understand how it is possible for millions of previously well-qualified workers to suddenly have lost the skills necessary for employment in such a short period of time. In other words, we must ask how were these workers able to fulfill employer demands just months before losing their job.

The real reason accounting for the sudden loss of jobs is due to the fact that these jobs were created by the real estate bubble. And when the bubble popped, the jobs disappeared. It’s as simple as that.

However, establishment economists have attempted to stray away from the realities of the real estate collapse by pointing to yet another misguided view supportive of the structural unemployment argument. According to establishment economists representing the right, the depressed real estate market has prevented the jobless from relocating to regions where their skills are in demand.

This is simply not true. Individuals who are tied down to their homes are obviously able to pay their mortgage and are therefore gainfully employed. Like the other arguments offered by establishment economists, this simply makes no sense whatsoever.

Perhaps the most ludicrous explanation that has been proposed to support the structural unemployment argument rests with the premise that the unemployed simply do not live in the places where there are job openings. This argument ties into the previous one. In other words, the unemployed are immobile due because they are unable to sell their home.

Let’s assume that this large group of unemployed workers had greater mobility. Certainly we can identify several million unemployed Americans who have suffered a foreclosure and therefore are no longer tied down to their place of residence. Such individuals would naturally relocate to states with lower unemployment, right?

The question is, would there be an adequate number of jobs for them once they relocated to states with lower rates of unemployment?  The answer is no.  All one needs to do to confirm this is to match the pool of some 16 million unemployed workers (with no job whatsoever, not counting underemployed) with the job openings in the small handful of states with a low unemployment rate.

So what’s the real problem accounting for the persistently high unemployment rate? 

Superficially, the problem points to lack of demand. At first this would seem to favor the argument posed by left-wing establishment economists, or the cyclical unemployment argument. During the early stages of the economic collapse, Washington sided with this argument. In order to resolve the cyclical unemployment issue, Obama passed numerous stimulus packages and subsidies in order to stimulate demand.

However, these attempts to stimulate demand have not addressed the fundamental problems that have accounted for the chronic period of reduced demand. This is specifically why each of these stimulus packages has been a complete failure. In short, Washington’s solutions have been ineffective and very costly.

According to establishment economists controlled by the left, the structural unemployment problem can be resolved if workers go back to school and learn new skills. This would help justify the delays in lowering the unemployment rate due to the time it takes to become reeducated and receive a job offer. But I can guarantee you that this approach would not resolve the labor issues in the U.S.

These same economists have stated that much of the mismatch in skills can be seen in the construction industry. According to these economists, due to the destructive effects of the real estate bubble many of these construction jobs will never return. Thus, according to this structural employment argument, unemployed construction workers must gain new skills.

The fact is that a good amount of construction workers were from Mexico. Many of them have already returned home because they have been unable to find work in a construction industry that is all but dead. In addition, construction unemployment was high even prior to the recession.

While a good deal of these construction jobs will never return, the main reason accounting for this trend is due to the fact that these jobs never should have existed in the first place. But of course, the real estate bubble created the illusion of job growth primarily in the construction, real estate and financial sectors. As a result, millions of temporary jobs were created from the credit and real estate bubbles made possible primarily by Alan Greenspan. [2]  

It was this bubble that created false demand. If these jobs were created based on real demand, they would not disappear forever. Instead, they would disappear according to cyclical adjustments and reappear during an economic expansion. This argument made by left-wing economists has served as the impetus for excessive economic stimulus packages over the past several years. However, this by no means serves to create real demand. The solution is the same as it has been for many years now. Free trade must be restructured to make it fair trade.  This is the central issue that I detailed when I wrote America’s Financial Apocalypse in 2006.

Since the publication of this book (which was also banned by publishers), I have continued to insist that the trade issue remains as America’s number one barrier towards the restoration of its long-term economic woes. Anyone who has analyzed the historical economic data understands this as well.

Of course, any real criticism of the destructive effects of U.S. trade policy would upset those who control politicians; corporations. This is one reason why I have continued to be banned by the media. It also explains why you will NEVER hear this issue brought up by those economists, politicians and investment advisers who have been inducted into the media club. [3] [4]

America’s media monopoly is controlled by corporate America and Washington. Thus, they do not want Americans to understand the real problems because it’s all about maximizing corporate profits at any expense, as one would expect from a fascist nation.  This is specifically why corporate profits have continued to reach record levels throughout this recession, which is now entering its 49th month.  Meanwhile, U.S. jobs continue to be shipped overseas. Finally, there has not been an increase in real median salaries in the U.S. since 1999.

While there is certainly a small portion of unemployed due to structural changes, this percentage is not appreciably higher than seen during recent recessions. In contrast, while some of the lost jobs are due to cyclical factors stemming from reduced demand, there are more fundamental variables in place which cannot be easily resolved; namely trade policy, although there are several other issues.

The main reason for the persistently high jobless rate in the U.S. is due to poorly structured trade policies which have reduced the incentives for domestic job creation. This has reduced demand during the current recession. However, real demand has been in decline for over two decades. Most consumers are unaware of this trend because it was masked by the rapid growth of the consumer credit industry and misguided monetary policies of the Federal Reserve. Only after the implosion of the credit and real estate bubbles have Americans begun to see the real face of the U.S. economy.

Ever since Bush prepared to leave the White House during the peak of the financial crisis, he was instructed by his globalist handlers to mention the old “we must guard against protectionism” line so as to reinforce the continuation of the propaganda campaign once Obama entered office.

When Obama entered the White House, rather than restructure free trade as promised, he actually expanded it into South Korea, promising it would protect thousands of U.S. jobs. But this is yet another lie.  In the past, I detailed how Obama has been no different than Bush. [5]

It is a fact that all U.S. presidents merely serve as puppets to corporate America, the Jewish mafia and Israel. John F. Kennedy was the last president who refused to bow down to these criminals. And we saw what happened to him. 

The fact is that the U.S. needs to engage in protectionism in order to shield itself from unfair trade and currency manipulation from China. However, this will never happen so long as the U.S. is controlled by a fascist regime which places corporate profits ahead of domestic jobs. Do not listen to the hacks that insist that it was protectionism that causes the Great Depression. This argument is weak at best for a variety of reasons.

This regime I speak of refers to the illusion of democracy that has been created through the so-called two-party system. They have also created the illusion of a free market system when in fact, the U.S. economy bears little resemblance to a real free market economy. [6]

In conclusion, the persistently high jobless rate seen in the U.S. is not due to structural issues. At the same time, it is not due to traditional cyclical issues. What we are seeing does not resemble any type of economic cycle I am familiar with. This is not simply an economic contraction. America continues to suffer from the longest and most severe economic recession in over 100 years. This recession is but one of more to come that will comprise the historic period to be acknowledged as America’s Second Great Depression once historians finally figure out what has happened. [7] [8] [9] [10] [11] [12] [13] [14]

For those Americans who continue to believe that they can change things at the voting booth, I would like to remind them that both parties are essentially the same when it comes to issues that matter most to Americans. That means Americans have no vote. Corporations control the economic landscape through bribes made to politicians. Meanwhile, Israel controls both foreign and domestic U.S. policy through its powerful lobby.  Until Americans realize these facts, there will be no impetus for change. [15] [16]


By Mike Stathis

Copyright © 2011. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.


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Anatoli Ostapenko
05 Dec 11, 01:28
US Unemployment

OK, lets see what we've got here:

1. On one hand there is the so the called free-trade policy, which causes continuing job outsourcing from the US.

2. On the other hand there is the USD based international trade and payments system, generates a significant fraction of jobs in the US.

Now, follow this - the first can not exist without the second. Testing: If there was no free-trade policy, the USD based system would disintegrate. If there was no USD based system, the free-trade policy would never be accepted.

But wait! This IS a classical dialectical contradiction! Marx himself would be proud to spot this one. So, what does this theory say about the future developments? It says that the existing system must die when the synergy of maturing contradictions involving everything else (social, military, cultural and other aspects) overwhelms it.

Dialectics doesn't really tell how to build a happy world - it is a grim science of death and destruction targeting complex systems where useless logic runs in interlaced circles. Oh, yeah - almost forgot - a new system shall take place of the existing one. What system? In theory, one has to analyze the so-called opposing forces (which drive the resolution process) to see that.

Anatoli Ostapenko

Electrical Engineer

Western Australia

05 Dec 11, 13:18
Jobs no demand

The FEDeral Reserve [a Private Corporation-few know this] is Owned by the Big banks US and European. The FED gives Our money to those Banks.

–No money gets to Main St.–Small Businesses make 70% of jobs–

–Those small businesses get their capital from pensioners and middle class savers CD’s in local/regional banks and credit unions-

-Those savings are wiped out by FED zero interest rate policy of Greenspan and Bernanke–66% OF AMERICAN JOB GROWTH!

–Until Interest rates normalize at 4-5% and people can save again–THERE CANNOT AND WILL NOT BE ANY JOBS INCREASE…SO–




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