Noting that the market ran up Friday because the creation of 67,000 new private sector jobs (about 25% of which were temporary) was somehow interpreted as good news, Schnapp says "give me a break." To put the latest employment numbers into perspective, she notes, you have to keep in mind that 8.5 million jobs were lost during the downturn. What's more, unemployment peaked at 10.1% and still sits at a lofty 9.6%.Except if one is a politician, or a media organization, like the NY Slimes, that would do anything to make their favorite President look better than he really does. Or maybe they really are just the propaganda arm of the Democratic Party.
Moreover, she points out, the jobs picture is pretty grim when you look at in its entirety. For example, she says, there are now 14.9 million unemployed workers. Add to that the underemployed and discouraged workers (those who have left the work force and part-timers who can no longer obtain full time jobs) and you come up with a total number of people in the unemployment doghouse of 25.7 million.
That's up 1.4 million from 24.3 million a month earlier, the kind of increase, Schnapp says, that one could hardly call good news.
But the housing market and the state of the banks.
The big problem, as she sees it, is that job growth is dependent on consumption growth and housing growth. But housing is in a depression and consumption is weak.Who knew that the Zombie Apocalypse everyone has been talking and joking about would actually be financial in nature.
Elaborating on the housing dilemma, Schnapp took note of the accounting rule change dating back to March 2009 that allowed banks to abandon mark-to-market pricing of assets and adopt instead "mark-to-make-believe," which created zombie banks. Then, she says, came the political pressure on banks not to foreclose on delinquent homeowners, which created more homeowners. The end result, not surprisingly, observes Schnapp, is a zombie housing market as far as the eye can see.
Since banks no longer have to mark their real estate holdings to the market, they are free to ignore reality. Of course, eventually all those houses will be sold, pushing the prices down farther. And decimating those "living dead" banks along the way.