Thursday, November 20, 2008
Auto Maker Jobs?
Anybody think that today's equity market sell off has ANYTHING to do with Automotive jobs?
The U.S. Finance, Insurance, and Real Estate industries, what someone smart called the "FIRE" economy, has a much, much bigger payroll, and the FIRE industry workforce is going to be more than decimated, perhaps quadruple decimation - 40% fewer people working in the FIRE industry by the end of 2010.
(Decimate comes from the Roman habit of motivating losing Legionaires by selecting every 10th member of a losing battalion and executing them on the spot in front of the others. The root of decimate is Latin for the number 10.)
Forget for a moment how much you detest Real Estate brokers, Stock brokers, and Insurance brokers. These people made up a huge percentage of income in the economy and tax receipts for the government.
Add these soon to be members of the newly ungainfully unemployed with folks in the same position in housing and automotive and you are looking at an unemployment number far in excess of 10%, and a loss in aggregate payroll $'s of much, much more.
I am afraid "Hope" and San Francisco "political sensibilities" are going to do little to balance the budgets of the various local, state, and federal governments. Those fun little social programs, Social Security and Medicare, are funded by payroll taxes. The end, IN REAL TERMS, of the various social programs that too many people have come to depend on is near. Sorry, but with the collapse of the Real Estate and stock markets, there are no "Rich" left to tax. If this keeps up, their won't be much of a middle class left to tax, either.
The folks in favor of wealth redistribution have succeeded, though not in the way they might have intended.
Actually that is not fair. I just could not help myself. Much of the "wealth" that was just lost never really existed. We just got around to recognizing that sad fact. For at least 15 years we have been arguing over an illusion of wealth. Oh, it was real enough to benefit the very few, but if you think that Microsoft is (was) really worth more than all of the harvests of all of the food in the world in a given year you must have bats in your belfry. Of course, that begs the question of future food costs and values...
But I digress.
If the markets continue their decline, we will be in serious trouble - fast. Pray that the rate of decline slows or that the market finds its footing. It is not the market that is the problem. The market is just taking the economy's temperature. If the market finds the economy has a fatal condition... like too much debt, unfunded pension liability, unsustainable budget deficits, an energy shortage, etc... well, it will let you know it.
No matter what, we have passed a critical point. It will take years to put humpty dumpty together, and by that time the U.S. will be in the teeth of the final Oil crisis.
This is it. Get your s--- together.
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 4:48 PM