Economist Stephen Roach appeared on CNBC Asia yesterday reminding us that the 9.7% official US unemployment stat dramatically under-states reality. The US Jobless rate today is actually 11.5% when we add back in the 3m disgruntled workers who have been unemployed so long that they have stopped looking for work: “For some bizarre reason, the U.S. statisticians do not count these poor souls as unemployed”. (The under-employed statistic is more like 20% when we count in the millions who are working less than they wish due to lack of employment opportunity).

"The demand side is going to be very impaired by the U.S. consumer and there's no other consumer that is going to fill the void," Roach continued.
While China and India make up nearly 40 percent of the world's population, Roach noted that the two countries will not be able to pick-up the slack in U.S. demand collectively, as their consumption adds up to $2.5 trillion, which is equivalent to 25 percent of total demand in the United States. That's a key reason to look for a double dip," he said, reiterating his view of a 40 percent chance of a double-dip in the next couple of years.

I wish I could disagree with him. It feels like October 2007 deja vu all over again.

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Ms. Park was a guest on MoneyTalk with Patricia Lovett-Reid Monday March 8 at 8pm EST. A clip is available on the web site here.   more »

There are many stories of late about people balking against tough choices needed to remedy their financial duress. Yes, being broke sucks.

But at the end of the day, laws of gravity do apply, and we humans must accept, adapt and move forward. These are remarkable times: the past couple of decades of falling rates and credit expansion have trained us to expect a high level of service and lifestyle that in many cases we can simply no longer afford. Actually one could argue that we never could afford some of these things, but thanks to 'credit magic' we were able to pretend otherwise for a good long while. It turns out, things weren't different this time; the piper has come for his payment.

See Bloomberg: German Politicians want Greece to sell islands.

And NY Times: As Budget cuts free prisoners, states face a backlash Remember all that hard-right crack down on crime under Bush Jr? Turns out most States can no longer afford the incarceration.

I am reminded of many real life examples over the years, where a bankruptcy or divorce, death or other misfortune suddenly demand a large financial reckoning to a family or individuals. Yard sale-like auctions of prized possessions are the norm. The initial response is usually always one of disbelief or outright rejection: "This is ridiculous!" "Over my dead body!" "I won't stand for it!" In the end, we all do what we must to change unsustainable habits and get back to the work of digging ourselves out and up. There are tough choices all around. But after stomping of feet and gnashing of teeth, the only solution is to cut the artifice, admit the mistakes and get back to honest, hard work.--the sooner the better. No more cake and eat it too. We have to give to get; and yes its hard to do.   more »

Stephen Roach, chairman of Morgan Stanley Asia Ltd., talked with Bloomberg's Maryam Nemazee about the U.S. economy and Federal Reserve monetary policy, See:Roach Expects `Very Modest' U.S. Consumer Spending March 4 (Bloomberg)
Bottom line from Roach: don't confuse the bottoming process in a 'new normal' global economy, with hopes for a 'bounce-back' recovery."

Also Robert Prechter, founder of Elliott Wave International Inc., talked with Bloomberg's Betty Liu about his stock market analysis and investment advice. See:
Robert Prechter Says Equities to Drop, Invest in Cash March 4 (Bloomberg).

And see this March 1, 2010 paper "Where are we now?" by respected Market Technician Dick Arms. (Hat tip The Big Picture Blog) Our market technician Cory Venable has been speaking about similar themes the past couple of months. I find it noteworthy when completely separate (and excellent) analysts use their own unique filter set and arrive at similar conclusions. Dick's paper is even readable for non-technicians—a bonus!   more »

MSN Money does a series of slideshows on market data which are often illuminating in terms of macro trends and big picture. This one: The bear market blues: 10 costly declines offers some interesting historical capture on 10 "bear' markets of the 1900's (not sure how they picked these ten, there were several other bad ones that were not included in the series).

Note some common themes throughout on human behaviour driving erratic markets. And keep in mind that only those not prepared for bear markets get mauled by them. Exit rules are required.   more »

I miss my grandparents. They have been dead for 26 years but I still think of them daily and miss them a lot. They lived through the depression; they knew how to make life from scratch. They were self-sufficient in ways that our generation seems unable to imagine. As a young analyst looking for mentors and wise counsel in the money business, I came up empty a lot. It seemed that the wise ones were extremely scarce and almost always at least 75 years old. Multi-decade experience reaching back to the 20's seemed to leave an indelible stamp of insight on a few. The trouble with 80 year olds is they eventually end sooner than we would like.

In April 2006 we lost John Galbraith. Last year Peter Bernstein and John Templeton in 2008. Paul Volcker, Warren Buffet and Charlie Munger are now 80 +. I guess they plan to just drop in their tracks some day; trying to teach right to the end. Trouble is I don't see many younger candidates to take their place to day. This interview with Charlie Munger is refreshingly candid.

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