The drumbeat of layoffs and plant closures has been riling up desperate workers who have little hope of finding a job elsewhere, with unemployment at 10.5%. But now the Socialist government, worried about a “radicalization” of these angry workers, has instructed police intelligence services to keep an eye on them. Not exactly one of the campaign promises.
Friday’s plunge in consumer sentiment was hastily ascribed to the Fiscal Cliff. Like Sandy, it’s recruited to explain everything that goes wrong. But over the last few days, one monkey wrench after another has been thrown into the hope machinery, including the collapse of small-business hiring plans to the record low set during the catastrophic post-Lehman days.
Especially of CEOs who parachute into the executive office. Wall Street’s knee-jerk reaction can be phenomenal. Citigroup’s massacre of 11,000 souls caused its stock to jump. But the same day, we learn that wages adjusted for inflation dropped 1.4% in the third quarter—a continuation of 12 years of declines that has hollowed out the middle class, pushed people into the lower classes, and devastated the poor.
The inexplicable American consumer, the strongest creature out there that no one has been able to subdue yet, has come to grips with a new reality, euphemistically called “New Normal,” though it isn’t normal by any means, but dismal. Feeling more upbeat, they nudged up the Consumer Confidence Index to a level not seen since February 2008—a level that caused people to tear their hair out at the time.
It’s been an unrelenting process. Survey after survey has shown that wages haven’t kept up with inflation since the wage peak in 2000. Families earned less at the end of the decade than at the beginning, a phenomenon not seen since World War II—the process of hollowing out the middle class. But now there is a new phenomenon: the unmentionable class, the class that doesn’t exist in America, is ballooning.
Hope was once again in vogue Thursday night in President Obama’s acceptance speech, after having gone the way of the green shoots. Hope has been swirling around the financial markets as well. The Fed keeps dangling QE3 out in front of them. And ECB President Mario Draghi injected a mega-dose of it with his bond-buying promise. It goosed the markets even more and powered them to multi-year highs. Then came the jobs report.
We’ve all heard about Wall Street employees who lost their jobs and ended up doing something unrelated, chasing after a dream, starting up a software company, working on a crab boat, teaching English to immigrants, run a taco truck, become a pole dancer…. So there should be indices that measure the number of people undergoing sudden and unlikely career changes—to give us a better gauge of the real job market.
Certain central bankers are coming out of the closet admitting that their favorite shenanigans—ultralow interest rates and printing money with utter abandon—can’t solve the very problems they were designed to solve, which has been obvious for a long time. What they’re not yet admitting massively, though some are starting to hand out hints, is just how much havoc these policies are wreaking.
Since the lousy jobs report, there has been a veritable orgy of Fed Speak with juicy morsels and contradictions, interspersed with leaks and rumors, that climaxed today with Chairman Ben Bernanke’s words of wisdom. It whipped markets into a frenzy, drove the Dow up 500 points, knocked yields to historic lows, and caused gold, the safe-haven, to bounce up and down like a rubber ball. And everyone was eagerly waiting for the big lie.
The ugly jobs report gave Mitt Romney what he’d been waiting for: a huge boost. He’s out making hay, calling it “devastating news for American workers and families.” An army of Republican talking heads swarmed over the land and pummeled President Obama with the jobs report. And just as Republicans see victory edge closer, shrill voices are calling for the Fed to launch the next round of quantitative easing. Collision alert!