Remember when I said that I had an interview for a short term position?
They decided to fill it internally.
Category: employment
Update on the Bayh Announcement
I don’t like the idea of a yet another Blue Dog becoming the Senator from Indiana, but Tamyra D’Ippolito is a political horror show.
She’s not just a political neophyte, she is also a 20 year veteran of Wall Street, including time at Lehman brothers.
So, what she appears to be is someone who spent 20 years on Wall Street, some of it at one of the more infamous players in finance, and then retired and decided to play dilettante.
It’s a toxic combination of ties to the financial crisis and political inexperience.
I’ll stick with what I said earlier, I’m pulling for Evansville Mayor Jonathan Weinzapfel, though I am going to hate spelling his name.
Cracked.com Gets Serious
They just listed the, “The 6 Most Statistically Full of Sh%$ Professions, (%$ mine) and they are:
- Stock Market Experts
- Wine Tasters
- Art Critics
- Criminal Profilers
- Weather Forecasters
- Sportswriting
Note that this is not just a slam at these professions. It is a statistical analysis about how they perform relative to random chance.
Stock market experts underperform the market, wine tasters cannot tell the difference between “Grand Cru” and “vin de table”, art critics cannot identify clear forgeries, criminal profilers don’t beat control groups, weather forecasters don’t beat chance, and sportswriters bat about .476 at predicting games.
Just to let you know what it means when you allow non-peer reviewed professions to declare themselves “experts.”
Economics Update (a Day Late)
Well, yesterday was, as Atrios says, jobless Thursday, and unemployment claims fell more than forecast, falling to just 440,000, which is still not enough for an increase in non-farm employment.
The White House is predicting about 95,000 new jobs a month being created in 2010, but based on some quick numbers, a 1.1% annual labor force growth times 155,200,000 people in the US labor force divided by 12 months, there need to be about 142,000 jobs created each month just to accommodate natural growth, so things aren’t getting better, they are just getting worse more slowly.
On the other hand, the news out of California, that tax receipts are well in excess of predictions, is legitimately good news.
Finally, in a discovery of the blatantly obvious, a the TARP’s Congressional Oversight Panel has determined that commercial real estate is imploding, and this threatens the viability of many small and mid sized bank. …………Hoocoodanode?
Economics Update
Click for full size
H/t Calculated Risk
We have the numbers for the December trade deficit, and it increased by 10.4%, largely on the increases in energy imports. (See graph pr0n)
In the nexus of banking and real estate, home mortgage demand fell last week, despite the fact that rates fell on the 30 year fixed mortgage, and as the Mortgage Bankers Association notes, the fall is in new home purchases, refinancing continues apace:
The Refinance Index increased 1.4 percent from the previous week and the seasonally adjusted Purchase Index decreased 7.0 percent from one week earlier. The unadjusted Purchase Index decreased 1.1 percent compared with the previous week and was 7.5 percent lower than the same week one year ago.
In international finance, the Bank of Korea kept its benchmark steady 2%, largely in response to surging unemployment in South Korea.
Australia, on the other hand, experienced the largest growth in the workforce in 3 years.
In currency, the dollar was mixed, largely on reports that a deal may be in the offing in the Euro Zone for Greece’s debt mess, news of which also drove oil prices slightly higher.
Matt Taibbi Nails it Again
He discusses the fact that John Thain, the man who spent over a million dollars rehabbing his office at Merrill Lynch while conspiring to conceal losses from Bank of America shareholders has now been appointed CEO of troubled business lender CIT.
Matt Taibbi asks the question that this raises, “Man, exactly what do you have to do to become unhirable in this country? Eat Christian babies on CNN?“
It’s true. As Mr. Taibbi notes, the “Genius” behind the LTCM fiasco is still getting to make his money playing with other people’s money.
This is all about corruption and nepotism.
Why People Hate Bankers
Because their systems are patently unfair.
Case in point, AIG, which is owned by the US government, gave retention bonuses to employees who no longer work there:
A substantial number of AIG’s Financial Products employees set to get some $195 million in retention payments no longer work with the bailed out insurer, sources familiar with the matter said on Wednesday.
It’s clear that such behavior not only does not serve society, but it does not serve the share holders or the company.
This is a crooked game, and it needs to be shut down.
I’m going long on pitchforks and torches.
Blankfein Buys a Clue
Well, it appears that he is a bit less arrogant than his ilk, as Goldman Sachs CEO Lloyd Blankfein year bonus was just $9 million, with none of it in cash, a far cry from the reports of $100 million:
Goldman Sachs stunned many in the Wall Street community Friday by awarding chief executive Lloyd Blankfein $9 million as his year-end bonus, far less than many were anticipating, and none of it in cash.
It was in restricted stock.
My guess is that there are some back channel deals, and the whole idea of a “just $9 million” being an exercise in frugality is odd, but he recognizes that there is a very real problem, and he is taking actions to immunize himself, as well as the vampire squid,* from some of the treats of regulatory and legislative action, so credit where is due.
My guess would be is that he got some security and buy-out guarantees that are worth a lot more, in exchange, but those are crafted so as not to show up headline.
Additionally, this may be a big “f%$# you” to his competitors, who now have to explain why they got bigger bonuses with less performance.
*Alas, I cannot claim credit for this bon mot, it was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.
The Employment Numbers
Click for full size
H/t Calculated Risk
Employment Population Ration, h/t Calculated Risk
Part time involuntarily, h/t Calculated Risk
Worst recession since WWII, h/t Calculated Risk
Temp hiring, which is a leading indicator, is improving, h/t Calculated Risk
Birth/death model, h/t Daily Reckoning
Well, the good news is that the unemployment rate fell to 9.7%. The bad news is that non farm payroll fell by 20,000, while analysts had forecast an increase of 5,000.
Unemployment falling is therefore entirely the result of people, most notably white women, having stopped looking for work, so I would not call it a good thing.
The fact is that long term unemployment, people who have been unemployed for more than 26 weeks,* has hit 4.1% of the civilian workforce, an all time record.
Barry Ritholtz digs a bit deeper, and finds positive data points:
- The household survey shows an increase, and the household survey covers small business missed by the business survey.
- Temp employment increased, and temp hiring leads full time hiring, assuming that companies don’t go “permatemp”.
- I would note that I have anecdotally observed this when I call “job shops” about contract work. Things to seem to be picking up, hence 2 interviews (1 in person and 1 phone) in the past 2 weeks, as versus 1 (phone) interview in the prior 6 months.
- Part-time for economic reasons (underemployed) fell sharply (3rd graph from top)
As I noted yesterday, there was a big change in the “birth/death” adjustment, (bottom graph) and the adjustment appears to me to be more of an exercise in political number manipulation than a reasonably applied statistical technique.
In any case, if you scroll down on the full BLS report, they talk about the adjustment:
Table A presents revised total nonfarm employment data on a seasonally adjust-
ed basis for January through December 2009. The revised data for April 2009
forward incorporate the effect of applying the rate of change measured by the
sample to the new benchmark level, as well as updated net business birth/death
model adjustments and new seasonal adjustment factors. The November and
December 2009 revisions also reflect the routine incorporation of additional
sample receipts into the November final and December second preliminary
estimates. The total nonfarm employment level for March 2009 was revised down-
ward by 902,000 (930,000 on a seasonally adjusted basis), or 0.7 percent. The
previously published level for December 2009 was revised downward 1,390,000
(1,363,000 on a seasonally adjusted basis).
So they were off by over 1 million in December … Oopsie.
You can see Bloomberg’s interactive page on the effects here.
*Full disclosure, this set includes yours truly, who has been out of work for about 30½ weeks.
Just in Case You are Wondering
Click for full size
Lazard HQ, Let’s bring pitch forks and torches,
30 Rockefeller Center, New York City, NY
Well, one of the older investment banks out there, Lazard Ltd. formed in 1848, just declared a profit in the 4th quarter.
Wait, no, they didn’t they had a loss.
Why did they have a loss? Because they decided that they had to issue yet another round of indefensible bonuses to their staff:
What should have been a profitable quarter a Lazard Ltd. turned into a surprising loss due to the investment bank paying its people big bonuses.
The firm doled out $616 million in compensation and benefits to about 2,300 employees last quarter, or more than triple the amount handed out in the same period in 2008. It was a consequence, Lazard said, of a decision to pay more bonuses in cash and accelerate some deferred cash awards from a prior year. But so great was the firm’s generosity that compensation costs overwhelmed quarterly revenues and resulted in a net loss of about $55 million for the fourth quarter. The charges also almost wiped out full-year profits.
Lazard Chief Executive Kenneth Jacobs, who took over from the late Bruce Wasserstein last fall, argued that he had no choice but to pay his people to protect and build the franchise. Lazard was one of the few major Wall Street firms to avoid government bailout assistance.
“[Our compensation policies] should enhance our competitiveness and drive shareholder value,” Mr. Jacobs said, in a prepared statement. “Our goal is to grow annual compensation expense at a slower rate than revenues.
(emphasis mine)
Note the comment about shareholder value. Lazard has been publicly held since 2005, but what the f%$#, just screw the share holders.
BTW, their goal, “to grow annual compensation expense at a slower rate than revenues,” that means that their goal is to make a profit …………… some day …………… in the indeterminate future …………… because compensation is pretty much their only expense, ex- renting some office space, and pay a few licensing fees.
They are spending over ½ million an employee:
For all of 2009, Lazard had $11 million in earnings, down sharply from the prior year’s $196 million. Total compensation costs for all of 2009 were a little over $1.3 billion, or an average $565,000 per employee.
Mr. Jacobs’ remarks about pay come a day after Morgan Stanley CEO James Gorman promised to rein in compensation this year at his firm. At Morgan Stanley, compensation ate up 62% of revenues last year. At Lazard, it was 72%. Typically, half of Wall Street revenues go out in compensation.
So, under the normal and customary rules, half the gross revenue, you know, before expenses goes to an already overpaid staff, but it’s not enough for the vampire squids smaller cousins.
Congress needs to change laws to allow shareholders to truly hold managers accountable.
I’m also wondering if shareholders have grounds for a suit here, since it’s pretty clear that management is ignoring them, and the well being of the company, in its decisions.
Economics Update
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Scary graph pr0n of the day, option ARM resets
h/t Calculated Risk
Well, today is “Jobless Thursday,” and initial claims unexpectedly rose to 480,000, rather than dropping as forecast, as did the rather more significant 4-week moving average, while continuing claims remained flat, though better productivity numbers might indicate a bit of an upswing.
Additionally, factory orders rose more strongly than forecast in December, which also is good news.
In the class half empty/full division. we have home listings rising for the first time in 18 months, which could presage a turn around in the market (full), or the fact that sellers who were trying to wait out the downturn are finally capitulating to the real estate market (empty), which would indicate further price declines ahead.
Me, I’m a bear on this.
Meanwhile, over on the other side of the pond, the Bank of England kept its benchmark rate at 0.5%, but perhaps more significantly, it announce that it is “pausing” in its quantitative easing (printing money) through buying bonds.
I’m not sure if they are just taking a month to survey the landscape, or if they think that recovery is, “just around the corner.”
Meanwhile, the recent swings in global stock markets, along with the jobs number, have investors worried, which has them buying up dollars, and these concerns also drove oil and other commodities lower.
Big Change in Birth/Death Adjustment
Last night, I made a brief mention of changes to the birth/death adjustment for jobs numbers.
Birth/death is basically a way to deal with the fact that small companies are being formed and ceasing to exist all the time, and the normal methods, the survey of employers miss the effect on net employment.
Well, tomorrow, the Department of Labor will release their annual adjustment, and it looks like the statistical fudge factor missed 824,000 job losses.
I guess they thought that all those people had chucked it all to become professional eBay merchants, but they were wrong:
As bad as the government’s jobs readings numbers have been during the Great Recession, we’ll soon find out the real situation likely was worse.
Much worse.
ob losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it’s expected that the Labor Department’s new estimate will be a loss of 8 million jobs.
“It’s an enormous understatement of the severity of the crisis,” said Heidi Shierholz, labor economist with the Economic Policy Institute, a union-supported think tank. “It confirms that things were actually worse on the ground than what the reports suggested.”
(emphasis mine)
The phrase, “The problem is that BLS models appear to have grossly overestimated the number of new businesses that opened during the recession.” is kind of an understatement.
With banks not lending to anyone how can someone start a business anyway?
I’m inclined to think that this was something that was driven in some manner by electoral concerns from Bush and His Evil Minions™, but that might just be tinfoil hat.
Wish Me Luck
I have a job interview for a short term contract, it starts now.
I posted this last night, but forward dated it.
It’s lower level than I would like, but hey, it’s work.
I won’t provide any information on the client, I think that it is a bad idea to blog about potential employers.
Economics Update
In the “recovery, my tuchas” division, we have the latest ADP estimate as to job losses, which shows that yet again, private sector employment fell, though the panglossian financial “journalists”, are now expecting employment to grow this month.
I don’t think so, seeing as how this is when the so-called birth/death adjustment gets rejiggered for the new year (more on this later).
Along with this, the Institute for Supply Management’s index of nonmanufacturing activity continues to remain in the doldrums, which is better than it was early last year, but still does not point to employment increases.
In the nexus of real estate and banking, mortgage applications were up sharply this week, but this was refinance activity, not home purchases.
In the old favorites of currency and energy, the dollar rose on the ADP report, as well as concerns about the potential Greek meltdown, while oil fell slightly on reports of strong inventories.
How About Paying Them More?
Yawn, another day, another report saying that the dearth of US citizens interested in majoring in technical fields is a national security threat:
Sure, we’re all plugged in and online 24/7. But fewer American kids are growing up to be bona fide computer geeks. And that poses a serious security risk for the country, according to the Defense Department.
The Pentagon’s far-out research arm Darpa is soliciting proposals for initiatives that would attract teens to careers in science, technology, engineering and math (STEM), with an emphasis on computing. According to the Computer Research Association, computer science enrollment dropped 43 percent between 2003 and 2006.
Umm ………… Hello?!?!?!?
You are asking how to encourage people who have the proficiencies to go into a technical field to do that, as opposed to, for example, becoming a banker or a stock broker.
But, of course, like the Cylons, they have a plan:
The agency doesn’t offer specifics on what kinds of activities might boost computing’s appeal to teens, but they want programs to include career days, mentoring, lab tours and counseling.
Like that will work: Ignore the poor pay and benefits, and the fact that your barista at Starbucks® used to be in IT, but after he got laid off the last time, he couldn’t find another job, because he only knows C++, not C#, because being a computer programmer or an engineer is just so f%$#ing cool.
By definition, people who have the wherewithal to go into science, technology, engineering and math (STEM) are people who can count.
If you want them to take a technical major, you have to promise better pay and benefits.
Duh …………
Economics Update
Click for full size
Worst post-Depression recession
H/t Economic Policy Institute
So, US GDP grew at a 5.7% annual rate in the 4th quarter, according to the advance estimate from the Bureau of Economic Analysis.
Some points: First, 5.7% is a spectacularly good number, the best in about 6 years, second, I expect that as more data comes in, future revisions will be downward, third, much of this growth was from a low “deflator” number, basically meaning that the numbers were juiced by the extraordinarily low inflation numbers, and fourth, as Krugman notes, it was an inventory blip, with over half of the growth being restocking of depleted inventories, not real growth.
Even with this number, as the graph pr0n shows, we are still down from peak more than any other recession since WWII.
Still, the Reuters/University of Michigan Surveys of Consumers was up more than forecast, to 74.4, and given that consumer spending is most of our economy, it is a big deal.
As to energy and currency, the GDP numbers did what was expected, with the dollar strengthening, and the stronger dollar pushing oil down.
[on edit]
Just in, in 2009, wages and benefits rose the least since statistics began to be kept in 1982.
Economics Update
Click for full size
H/t Calculated Risk
It’s what Atrios calls “Jobless Thursday”, and while the number of people filing for initial unemployment claims fell, it was less than forecast, claims fell t0 470,000, not the estimate of 450,000, the 4 week moving average rose, and the number of continuing claims fell by 57,000 to 4.6 million.
On a brighter side (above link) orders for durable goods did rise in December, as did orders for capital goods, and while the Federal Reserve Bank of Chicago’s economic activity index of fell in December, the 3-month moving average rose.
Personally, I tend to place more credence in the transportation based indices, and so the fact that the Baltic Dry Index, an index of shipping costs, fell to a 3 month low, to be the thing that I would hold onto, which makes me bearish ………… Then again, I’m always bearish.
Since I missed the economics update yesterday, I should note that the Federal Reserve Open Market Committee kept its benchmark Fed Funds rate 0.25%, effectively 0%, and while their statement was significantly more upbeat than last time, they are still signaling that the rates will remain low for some time.
Meanwhile, in real estate, Freddie Mac issued a report showing that mortgage delinquencies jumped in December, and new-home sales fell again in December, in yet another indication that the recent activity was an artifact of the tax credit, as opposed to any real market turn around.
One interesting data point, again from Freddie, is that the ratio of people cashing out from their houses to those lowering balances or rates hit an all time low, meaning that people were refinancing to lower their payments, and not using their homes as an ATM.
In the long run, this is a good thing, but in the short run, it runs headlong into the paradox of thrift.
In the more general world of finance and banking, we are seeing skittishness about things like the Greek financial problems, and so there is a flight to quality, which has increased demand for US Treasuries, which has driven the rate on the 1-month treasury to a negative interest for the first time in 10 months, interestingly enough, the T-bill auctions seem to indicate that it’s Americans who are fleeing to quality, as the last auction had robust demand, but foreign buyers seemed to be backing off, at least the foreign central banks.
In consumer debt, credit card charge-offs fell a little in December, which indicates that people are a bit more able to pay off their debt, though the fact that Chase had a “payment holiday” may be a large reason for this.
In the old standards of energy and currency, crude oil fell slightly, while the dollar hit a 6½ month high against the Euro, largely on concerns that Greece will go the way of Ukraine, the Baltic States, or Iceland.
Of course, since Greece is in the Euro zone, when none of the other nations were, that is where it gets pretty hinky.
Full FOMC statement after the break:
Press Release
Federal Reserve Press ReleaseRelease Date: January 27, 2010
For immediate releaseInformation received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter. The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets.
In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1. The Federal Reserve is in the process of winding down its Term Auction Facility: $50 billion in 28-day credit will be offered on February 8 and $25 billion in 28-day credit will be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 for loans backed by new-issue commercial mortgage-backed securities and March 31 for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.
Economics Update (For the Week)
Well, it’s “Jobless Thursday”, as Atrios is wont to say, and it ain’t a good Thursday, with initial claims up 36,000 to 482,000 and hitting a 2 month high, the 4-week moving average up 7,000 to 448,250, though continuing claims fell by 18K to 4,599,000.
Additionally, the Philadelphia Federal Reserve Bank’s business activity index fell from 22.5 to 15.2, which still indicates growth, positive numbers indicate growth, but might show that the stimulus package is running out of steam.
Also, it looks like finances may be catching up with the bank, with Citi reporting a loss for the year on a horrible 3rd quarter, and Bank of America posted a large loss, largely as a result of its eagerness to pay off the TARP so that it could go back to overpaying its incompetent executives, while Morgan Stanley misses its earning estimate, though it still turned a profit.
I had kind of figured that a lot of the obscene profits earlier in the year were the result of rearranging deck chairs, and I think that the 4th quarter results give credence to this view.
Note that these numbers were turning worse even as consumer defaults were falling.
BTW, in the UK, we are seeing journalists running around like chickens with their heads cut off over the recent spike in consumer prices, up to a 2.9% annual rate.
Kind of silly when you think about it.
US inflation seems well in check, with the
Producer Price Index for up 0.2% in December,
In real estate, home builder confidence fell in January, but the Architecture Billings Index was up slightly, though still below 50, indicating further contraction.
The jump in building applications, would seem to indicate improvements in the real estate market, but the FHA is increasing premiums and tightening loan standards, which may deflate the balloon.
The FHA really does not have a choice. Their balance sheet is a complete mess.
Weird
I was going through the job boards, and came across an opening for an engineer for a non-line of sight weapons system to go on the US Navy’s Littoral Combat Ship (LCS) outside of DC.
Since it’s rather similar to work that I have done on the Future Combat Systems (FCS), I clicked through to apply, and it takes me to the jobs page of Ukpeaġvik Iñupiat Corporation.
So, I’m looking at the name, and saying, “Gee, it sounds like Inuit,” so after I fill out the application, I click the “about us” page, and get:
Ukpeaġvik Iñupiat Corporation (UIC) is headquartered out of Barrow, Alaska – the northernmost point of North America. Barrow is home to more than 4500 people, a majority of which are Iñupiat Eskimos.
As an Alaska Native Corporation, UIC provides social and economic resources to its 2,100 shareholders, and their descendents, who primarily reside in Barrow, Alaska. UIC is ranked 8th among Alaska Business Monthly’s 2008 survey of Alaskan-owned companies. UIC employs over 1,400 people worldwide, with over 750 in Alaska.
My first thought was, “How Odd.”
My 2nd thought was, “Was dad involved in some level in the early days of this corporation,” as he was on Governor Bill Egan’s cabinet as director of planning, but he said that the native corporations were created with the money from the oil revenues, which started to flow in after we left the state.
Still it’s kind of strange how these things tie together.
Not Enough Bullets: Shareholders Got a Gun Edition
JPMorgan Allots $378,600 Per Investment Bank Worker:
JPMorgan Chase & Co., the second- largest U.S. bank, set aside $9.3 billion for compensation and benefits for investment-bank employees in 2009, enough to pay each worker in that unit $378,600.
The reserve is 33 percent of the investment bank’s revenue for the year, compared with 62 percent in 2008, New York-based JPMorgan said today on its Web site. That’s the lowest proportion allocated for pay since JPMorgan merged with Bank One Corp. in 2004.
You know, if shareholders had any real power to direct a company, the idea that 33% of revenue go to bonuses, much less 62%, would be a thing of the pass.
It is currently illegal for shareholders to vote on compensation plans. How about we change the law and make it legal.