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Mark's Market Blog

9-4-09: Women in the Workforce

By Mark Lawrence

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The markets got a small jolt this week, then recovered at the end of the week. However, financial stocks took a step down. The next few weeks will tell what this means: if Goldman & co can keep financial stocks artificially high, the market will probably continue to more or less trade sideways, perhaps up a bit. If investors start questioning how four basically bankrupt financial institutions - CitiBank, Fannie Mae, Freddie Mac, AIG - can account for 35% of all trades and have their valuations triple in a month, then there could be a steep drop in financials, likely followed by a drop in the market as a whole. Many are bulls these days, drinking the kool-aid "the recession is over!" Some are bears, thinking there will be a replay of 1929 any day now. I think this market is grossly over-valued and the economy is far worse than Washington would lead us to believe. However China and the Fed are still funding this little party, so I think we're waiting for some serious news before the market drops seriously. Now that Cash for Clunkers is over and we're almost at the end of the $8000 house tax credit, it may be that the flying monkeys are just around the next bend. . .

S&P 500 June 4 2009 to September 4 2009

One of the major problems in this crisis has been banks too big to fail, requiring a highly unpopular federal bailout. Since last fall, however, the largest banks have been very active in buying up smaller troubled and failed banks, with the result that the top 10 banks, the ones too big to fail, have increased their size and market share. The FDIC is nearly out of money and has increase their watch list from 20 banks two years ago to 80 banks last year to 420 banks today. The FDIC claims that 13% of the banks on their watch list wind up failing; however 80 banks have been closed so far this year. A slowly brewing tropical storm of failing commercial real estate loans and more mortgage foreclosures in 2010 make it seem likely that we have only seen the beginning of bank failures. BofA, J.P.Morgan, Citigroup and Wells Fargo have only begun growing, two years from now they're going to look positively bloated. Of course they love this, as the bigger they get, the stronger the implicit government guarantee behind them. BofA and Citi are considered zombies, J.P.Morgan and Wells Fargo are considered troubled.

Bank Assets 2005 Assets 2009
Bank of America $1,082,000,000,000 $2,800,000,000,000
J.P.Morgan Chase $1,014,000,000,000 $2,175,000,000,000
Citigroup $706,000,000,000 $1,900,000,000,000
Wells Fargo $403,000,000,000 $1,300,000,000,000

Unemployment hit 9.7% in August, a 26-year high. This is a "Recovery?" However, we've reached a point in our recession where there's finally some good news on the unemployment front: The number of people whose unemployment benefits are expiring each week now nearly equals the number of new applications for unemployment benefits each week. Unemployment has stabilized!

Women held 49.83% of the nation's 132 million jobs in June and they're gaining the vast majority of jobs in the few sectors of the economy that are growing, according to the most recent numbers available from the Bureau of Labor Statistics. Women will become a majority of workers in October or November. Through June, men have lost 74% of the 6.4 million jobs erased since the recession began in December 2007. Men have lost more than 3 million jobs in construction and manufacturing alone.

The only parts of the economy still growing - health care, education and government - have traditionally hired mostly women. The gender transformation is especially remarkable in local government's 14.6 million-person workforce. Cities, schools, water authorities and other local jurisdictions have cut 86,000 men from payrolls during the recession, while adding 167,000 women. Women have accounted for 80% of the new jobs in health care and 94% of the new jobs in government. Unemployed men need not apply.

Feminists like Heidi Hartmann, president of the Institute for Women's Policy Research, are hailing this as a step towards true equality. I disagree. Most the young women I know are single moms, and more or less never sleep. They live with boyfriends who play XBox all day and beg money off them. They get minimal support from their un- or under-employed exs. They worry all the time about bills and money and if their car will keep running. Retirement is completely over the horizon, nothing extra to save, no idea how to save or invest. Instead of depending on a man who chose to marry them and father their children, they depend on a boss who keeps them until the next downturn, or if they're lucky a unionized government job with a retirement package guaranteed by a nearly bankrupt government. It's been known for some years that when the husband's income drops below two-thirds of the family income, the divorce rate skyrockets. We are witnessing the complete destruction of the American middle class family, and its replacement with the same system they have in the third world: women work to support their children, men screw off. Or as put in Clint Eastwood's latest movie Gran Torino, "Hmong girls go to college. Hmong boys go to jail." It doesn't work in the third world and it won't work here.

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