Post Crisis Scorecard – Global Debt Up $57 Trillion, 60% of American Jobs Created Are Low Level, Record Youth Living with Parents

Screen Shot 2015-02-06 at 12.13.51 PM
This morning, my Twitter stream was filled with some of the most outlandish bullish economic victory laps from pundits I’ve ever seen. The source was the monthly employment report, which showed a larger than expected increase in employment as well as higher wages. In addition, there was a huge upward revision to employment data in November. Interestingly enough, on the same day this report was released, several important articles came across my screen that make me as concerned as ever about the true state of the economy and where we are headed.

First, CNN Money just yesterday published an article titled: Obama Jobs: More Caregivers, Servers and Temps. Here are a few excerpts:

Got a job while Obama was president? Then there’s a good chance you are working in healthcare or food service or as a temp.

Those sectors were responsible more than 60% of the jobs created since Obama took office in January 2009.

Healthcare now employs 14.9 million Americans, up 11% over the past six years, according to a recent Pew Research Center report. More than one in 10 payroll jobs in the U.S. are in this industry.

Much of the job growth in healthcare has taken place in home health care services and outpatient care. That follows both the aging of America and the shift away from more costly hospital and nursing home care. These later two industries added only 3.7% and 1.2% more jobs, respectively, since 2009.

Meanwhile, bars, restaurants and other food-service employers have also been adding to their payrolls. More than 10.8 million people now work in this industry, up 14.6% over the past six years.

And temporary help agencies saw their employment soar 52.5% during the Obama administration to just under 3 million.

Here’s a chart:

Screen Shot 2015-02-06 at 10.47.46 AM

For concerning story number two, I turn your attention to a New York Times article titled: Global Debt Has Risen by $57 Trillion Since the Financial Crisis, Which Is Scary. Here are a few excerpts:

Here are two things we know about how debt affects the economy.

First, in the abstract it doesn’t matter. For every debtor there is a creditor, and in theory an economy should be able to hum along just fine whether a country’s citizens have a great deal of debt or none. A company’s ability to produce things depends on the workers and machines it employs, not the composition of its balance sheet, and the same can be said of nations.

Second, in practice this is completely wrong, and debt plays an outsize role in creating boom-bust cycles across the world and through history. High debt increases the amplitude of economic swings. To think of it in terms of the corporate metaphor, high reliance on borrowed money may not affect a company’s level of output in theory, but makes it a great deal more vulnerable to bankruptcy.

That’s what makes a new report from McKinsey, the global consulting firm, sobering. Researchers compiled data on the full range of debt that countries owe — not just their governments, but corporations, banks and households as well. The results: Since the start of the global financial crisis at the end of 2007, the total debt worldwide has risen by $57 trillion, rising to 286 percent of global economic output from 269 percent.

So far, the Chinese government has skillfully managed a slowdown in economic growth and signs of a housing boom reaching its end, but whether it will be able to avoid a sharper correction is one of the great questions hanging over the global economy.

How skillfully has it really managed the slowdown? It feels as if every other day I see stories about increased authoritarianism and new internet crackdown measures. I think China is way more politically vulnerable than people recognize.

Meanwhile, the McKinsey report can be read as giving a largely positive assessment of the United States. While total debt for the real economy is up by 16 percentage points in the United States, to 233 percent of G.D.P., household debt is actually down by 18 percentage points and corporate debt by 2 percentage points. A rise in public debt since 2007, in other words, largely offset declines in private-sector debt.

Still, if you accept our starting premise — that high debt, whether public or private, makes economies more vulnerable to economic shocks and tends to fuel booms and busts — the report offers plenty to worry about.

But the solutions they offer are big policy changes that would happen only glacially. The reality that economic policy makers around the world must grapple with, especially those in China and Japan, is that eight years after a financial crisis brought on by high debt, we may not have learned as much as we would like to think we have.

However, what is most disturbing about the above when it comes to the United States, is that more than half a decade after a crisis fueled partly by questionable debt considered AAA, U.S. debt to GDP is up 16 percentage points to 233% of GDP.It is well known that much of the increase in public debt has been the result of trying to prop up the economy. Yet we just learned that 60% of the new jobs created since 2009 have been of very low quality. Recall that “temporary help agencies saw their employment soar 52.5% during the Obama administration to just under 3 million.” What do you think things are going to look like during the next cyclical downturn?

Finally, we arrive at the following related article of the day. This one is from Bloomberg and titled: The Simple Reason Millennials Aren’t Moving Out Of Their Parents’ Homes: They’re Crushed By Debt. Here are a few excerpts:

The share of young men and women living with their parents rose to a record last year

Millennials are not budging from their parents’ basements, even though the job market is on the mend. One really big reason? Student loans. 

Last year, the rate of 25- to 34-year-olds living at home rose to 17.7 percent among men and 11.7 percent for women, Census data showed last week. That is a record high for both genders.

To make things even worse, a super-hot housing market is making it too expensive for even gainfully employed millennials to get their own place. 

“Strengthening youth labor markets support moves away from home, but rising local house prices send independent youth back to parents,” the report said. 

There’s so much important information in this short article it’s incredible. First, the piece blames the living in basement phenomenon on debt levels. What happened to the notion that debt doesn’t matter?

I’d add that an equally important factor is that most of the jobs created in the Obama years have been menial, low paying jobs. As I highlighted earlier.

The last point though is the most interesting. It notes that “a super-hot housing market is making it too expensive for even gainfully employed millennials to get their own place.”

This is quite bizarre, since it is millennials themselves who should be driving the housing market. That would be the case if the entire public policy response post-2008 was anything more than an oligarch bailout.

An unbiased observer can plainly see that the entire post-crisis response has been to do “whatever it takes” to protect the power, prestige and wealth of politicians, central bankers, Wall Street, and the super rich. It was a leveraged bailout of the status quo. It certainly hasn’t succeeded at all in fostering a healthy free-market economy.

The results speak for themselves, and funneling even more money to oligarchs isn’t going to change the situation. As I mentioned on Twitter earlier today:


For related articles, see:

America Meet Your New Slumlord: Wall Street

The Face of the Oligarch Recovery – Luxury Skyscrapers Stay Empty as NYC Homeless Population Hits Record High

As the Middle Class Evaporates, Global Oligarchs Plan Their Escape from the Impoverished Pleb Masses

Welcome to the Recovery – U.S. Child Homelessness Hits Record as Poverty in Mass. is Highest Since 1960

In Liberty,
Michael Krieger

[dfads params=’groups=5364&limit=1&ad_html=p&return_javascript=1′]

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

7 thoughts on “Post Crisis Scorecard – Global Debt Up $57 Trillion, 60% of American Jobs Created Are Low Level, Record Youth Living with Parents”

  1. This victory lap reminds me of a You Tube video of a few years back. It showed a drunk and/or insane Indian dancing a jig atop a passenger rail car with an electrified line overhead. As those on the ground tried to coax him down, the merriment intensified. Then…he reached up and touched the line. The smoke cleared just in time to see a charred Indian fall over face first, dead before he hit the ground.

    We can’t dig ourselves out fast enough from the rising tide of bullshit that engulfs every mainstream reportage of the economy. It’s bullshit fed to a people raised on bullshit, who prefer bullshit and run from anything that doesn’t resemble bullshit.

    Future charred Indians of America unite! You just have a wee bit further to grasp…

    Reply
  2. Food service, especially fast food joints will soon be automated because of all the crybabies who demanded a minimum wage increase.
    In Seattle the minimum wage went up to 15.00 per hour. Just after that people were rioting in mcdonalds because the mcnuggets were too expensive. . .WHAAAAAA! Crybabies can’t see their nose despite their face!

    Reply
  3. This comment about the minimum wage ignores the fact of the devaluation of the dollar. Who was it? Max Keiser? Who said that if the minimum wage were tied to the money supply, today it would be over $100 per hour?

    According to someone over at MIT:

    “The minimum wage does not provide a living wage for most American families. A typical family of four (two working adults, two children) needs to work more than 3 full-time minimum-wage jobs (a 68-hour work week per working adult) to earn a living wage. Across all family sizes, the living wage exceeds the poverty threshold, often used to identify need. This means that families earning between the poverty threshold ($23,283 for two working adults, two children) and the median living wage ($51,224 for two working adults, two children per year before taxes), may fall short of the income and assistance they require to meet their basic needs.”

    http://livingwage.mit.edu/

    So, while cheap McNuggets are important, I personally feel that working people getting paid enough to live on is just a bit more important.

    And let’s face facts – McDonald’s could pay the higher wages, NOT raise the price of McNuggets and STILL make a tidy profit. OR, they can raise the price of McNuggets, blame it on higher wages and make people believe that higher wages are an evil terrorist plot that will lead to the downfall of the free world and make Baby Jesus Cry.

    I guess now we know which option they prefer. As if there was any doubt to begin with.

    Reply
  4. I am a single, elderly, disabled, former sustainable farmer lady who used to grow vegetables for local Food Banks before I had to quit because of multiple complex cancers that I reversed on my own (via “alternative” plant-based therapies), while living in a barn, and restricted to a $1000/month SS check. I would like to add another fact-based comment about our distorted sense of what’s going on with America’s economic reality and the manufactured reporting by our government’s Evil Accounting Geniuses. This phenomenon I am going to try to describe has occurred across the decades and in multiple areas of the typical low-income person’s life, and it is this: they always calculate their taxes and qualifying level of low-income-ness to be just a few dollars above what you would need for that tax relief or assistance program. It is hard to explain, but whether it is a Winter Fuel Relief program you won’t quite qualify for (because you bring in $4 too much)…..you are $5 over the level of income required for Legal Aid assistance to get help with predatory medical bill collectors…..your income which qualifies you for Food Stamps is $15 too high to receive $130 in food stamps so you get $16…..or the evil accountants will calculate that your level of Social Security check ($1000) means that as of January 2015, you will be deducted (again) for Medicare after paying for this health care coverage over the course of 50+ years of employment income deductions, which was taxed to begin with, and you will now be buying again due to healthcare cost re-distribution caused by Obamacare and millions of new immigrants–we elderly-disabled are being charged for Medicare all over again through Social Security check deductions. This amounts to paying for Medicare coverage – which BTW, as of 2015 is almost non-existent coverage, a grand total of 3 times over the course of my life. Meanwhile, due to skyrocketing medical costs and meaningless co-pays, and uncovered costs for most things, I am right now for example, attempting to set myself up to make minimum payments to multiple (many) uncovered medical services for the rest of my life while trying to live on this $1000/month SS check. My solution? Move into my 30-year old sick station wagon (write a book on how I survive) and save a little each month to buy a better car in a couple years – if I am still alive. You know those Eugenicists on the Alex Jones show? They might be on to something. The Evil Intent in calculating economic data is hard to ignore. Many less resilient and less resourceful than I will just fade away – these Americans are all around you and me. Our government has developed a unique method and means of “killing you softly” through data manipulation and for almost a century, has been buying the media channels so they could promote their propaganda. In the end, the biggest problem in all this is the loss of the Fourth Estate: the Watchdog of Democracy: The TruthSeeking Media to tell the story that is.

    Reply
  5. I am English living in Italy and the same is happening all over the EU ,The Government is irrelevant to most people .We are intrested in Public Services,Employment,Dept etc, the Governments main intrest is proping up bankrupt banks and Fascist Governments.
    Fascism should more appropately be called Corporatism because it is a merger of State andCorprate power,
    Benito Mussolini.
    I think this is were we are.

    Reply
  6. Record number of youths living with their parents?

    Well, if you people had collectively cared to think about where your country was heading and the future more than you cared about having your own houses, cars and your LifetsyleTM in general…
    That is why we can´t have nice things anymore.

    Better share an apartment with other young adults and join a car-sharing club and so on, there are way more interesting things to use your own money and time on.

    Don´t forget, when you ride alone, you ride with Obama!

    Reply

Leave a Reply