Market Talk

Think the unthinkable.

So I talk about a depression, and whatda I get? Crickets. But let Paul Krugman cry about one, and everybody’s talking about it. Jeez Louise, I guess it really is all about your name. And not your first name, either.

Anyhow, I understand Krugman’s point, to a point. He now says we’re on the verge of a third depression, with the two previous ones coming in the 1870s and 1930s. Got it. I’m not so sure I buy his general prescription, that more government spending is the way to go. FDR spent money for years, and where’d it get him? I’m just not totally convinced.

Now let’s assume something wild, like, oh, I don’t know, that Larry Kudlow’s wrong, and that this is the third major economic depression like Krugman says it is. Well, then, you’re looking at this: a depression, then roughly 60 years until the next one, then a depression, then roughly 60 years until the next one.

There’s a pattern there, you might say. If that’s so, it just goes further to prove that the current environment is beyond any specific policies issues. (Although I’d still argue, and have, that a number of very specific developments over the years led to our current travails.)

Meanwhile, back to the present, John Hussman is starting to sound more than just a bit worried. Now, yes, Hussman is one of the ones that wears the bear label like it’s some kind of scarlet letter. He also happens to be one of the ones that was right while entertainers like Jim Cramer were laughing off the housing collapse.

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Newswires’ Madeleine Lim wrote up the following snippet:

Some stats as reminder going into tomorrow’s jobs report, courtesy of RBS’s Alan Ruskin: According to BLS, a monthly change in employment of 107,000 is statistically significant for the payrolls report; a statistically significant change for the household survey is 400,000.

Market expectations range from -100,000 to +85,000, he notes. Dow Jones is projecting a 10,000 drop.

“The psychology of a positive or negative number looks enormous – and ridiculous!” he notes.

Madeleine and I have been making the point here and there, and we’ll probably make it again somewhere tomorrow, that there’s very little difference between a gain of 25,000 and a loss of 25,000 in a labor force of 150M some-odd workers. The trend is, of course, important. Losing 25,000 workers in a month is better than losing 700,000, and gaining 25,000 is even better.

But at this point, with capacity utilization still skimming near its record lows, there just aren’t too many positions left to cut. What matters now is job growth, material job growth, and that is nowhere on the horizon.

Hey, we had to look it up too.

Today’s supposed to be a day where the few bored reporters who get stuck in the newsroom spend the day eating everybody else’s leftovers, dutifully repeating the hyberbolic and inflated estimates of holiday sales from various retail trade groups and tidying up our cluttered desks.

We’re supposed to interview the lunatics who showed up outside Best Buy 24 hours before the doors opened, film the mobs as they crash the gates, and grumble that we’re already sick of Christmas songs.

But “Black Friday,” the concocted retail sales “event,” has been usurped today by an actual event, the unfolding crisis in Dubai over the debt of state-owned Dubai World. Everybody’s still reacting to the news that Dubai asked for a “standstill” on its debt payments, so it’s far too early to say exactly how big a deal this is. Still, it bears careful scrutiny. This could turn out to be something that’s mainly contained to the Middle East — and apparently some UK banks — or it could be the loose end of the ball of string that represents this global reflation trade.

At the least, as the Journal’s Richard Barley writes, Dubai has put investors on notice.

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