The WSJ warns that any recovery in employment is going to be slowed by the fact that many of the jobs lost aren’t ever coming back. This is normal for any recession—it’s part of that whole creative destruction thing.
But since much of the economic activity of the 2001-2007 recovery was a mirage, many of the jobs in those years—think construction and finance— were bubble-fueled ephemera. They won’t come back in near the numbers they reached in the bubble. That will weigh on any recovery:
The permanent loss of many jobs may keep the labor market from fully recovering for a long time to come.
And this is good historical context:
Prior to the 1990s, jobs rebounded quickly once recessions ended. Payrolls fell by nearly three million in the deep downturn that extended from July 1981 to November 1982. But by the start of 1983, the economy was creating jobs again, and by the end of 1983, the U.S. job count had exceeded its old peak.
That was because more of the job losses were essentially temporary, with manufacturers and the like letting workers go with the implicit expectation that they would be hiring them back once the worst was over.
But since the early 1990s, jobs have been slower to recover from recession. After the 2001 downturn ended, job losses continued for nearly two years. It wasn’t until 2005 that the job count returned to its prerecession high.
Productivity-enhancing technology and competition from low-wage countries like China made more job losses permanent.
— Simon Johnson at The Daily Beast says the Angelides Commission has the chance to cause real change coinciding as it does with the sure-to-be-outrageous bonuses about to be announced on Wall Street. He has a pertinent question for the commission to ask Goldman’s Lloyd Blankfein:
If Blankfein says that they didn’t need to be saved, then why did he go to such efforts to ensure Goldman (along with Morgan Stanley) could become a bank holding company (thus gaining access to Fed money)? And if he does acknowledge that this effectively saved Goldman Sachs, how can he justify the bonuses of 2008 and 2009?
There are more questions for Wall Street from Eliot Spitzer, William K. Black, and Frank Portnoy over at The Huffington Post.
And don’t forget Andrew Ross Sorkin’s very good questions in the NYT this morning.
— Reuters’ Matthew Goldstein continues to advance the ball on the AIG/Fed/SEC secrecy story. He reports today that a filing the SEC allowed AIG to keep secret contains information that could help identify how toxic the assets they swapped really were.
The redacted information includes things such as the CUSIP, or trading ID number, for each security; the name of each security and its face value. Also redacted was the distressed market price, or “negative mark to market” value, for each security sold to Maiden Lane III….
“They didn’t want you to know which deals had soured the fastest,” said (Janet) Tavakoli, president of Tavakoli Structured Finance and a vocal critic of the AIG bailout. “The reason they didn’t want to release these details is because it would have shown that some securities suffered only moderate discounts while others were worth much, much less. And that could have prompted an investigation into the deals that performed the worst.”