Unemployment: the tragedy continues, as does Osborne

Today the ONS revealed that there has been a big rise in unemployment over the last three months. The jobless rate rose to 7.9%, meaning there are now 2.49 million people without work.



According to the BBC and a Press Association newswire this was a "surprise", with most economists apparently believing unemployment would fall. Quite why this should have been the case is not clear. Then again these same 'expert' economists also thought the economy would grow by around 2.3% this year, and the 2008 crash came as a surprise to them. You might as well ask your cat!



While 2.49 million people are unemployed, there are another 1.26m working part-time who are looking for full-time work, which means there are 3.75 million looking for work. Compounding this misery is the news that the number of vacancies has fallen again to just 449,000.



Tragically, 409,000 people have now been unemployed for over 2 years. Welfare cuts and more conditionality cannot possibly work when there are no jobs (and there's no evidence they do even when there are). Training opportunities are also being cut.



Youth unemployment rose to 20.2%, up 15,000 to 949,000. Male youth unemployment makes particularly grim reading: 40.8% of 16-17 year olds + 19.9% of 18-24 year olds. Of course the persistent and unprecedentedly high youth unemployment levels are entirely coincidental to the recent riots that swept London and spread to many other UK towns and cities.



Economic growth is stagnant, inflation is rising, unemployment is up, real wages are falling, and more cuts are promised. Osborne's policies are "sheer criminality, pure and simple".



The PCS union is right to highlight the idiocy of closing jobcentres at time of rising unemployment. That policy has a rival for most stupid of the day in enterprise zones, which will apparently solve everything (Cameron told the press today that they will be "trailblazers for growth, jobs and prosperity throughout the country"). Yet they are only projected to create 30,000 jobs over four years, when unemployment is nearly 2,500,000 and rose by 38,000 in the last 3 months alone.



Instead, the clue to recovery lies in revealing where the biggest slump in employment has been: the worst hit public sector employment sector has been construction, down 8.5% over the last year. This has happened due to the massive capital spending cuts made centrally and enforced upon local councils. The solution to this malady must be to invest in infrastructure: renewable energy, public transport and council housing - which would create jobs and help to solve the environmental and housing crises that we also face.



Osborne though seems set on more of the same failed hard right dogma: tax cuts, spending cuts and more privatisation. It will fail and the misery will continue for the swelling ranks of the unemployed.

Stock markets and nonsense

If someone walks into a pub and declares their jacket to be worth £300, but everyone else declares it to be worth a mere £50 - has £250 been wiped off the economy?

It's an interesting question, because today the Guardian website squeals that "World stock markets tumbled sharply again on Thursday, wiping nearly £50bn off the value of Britain's biggest listed companies". Further down the article we learn that in fact it's worse: £110bn has been wiped off in the past week!


Whoops, that is careless! Britain's biggest companies have lost £110bn! But it's nonsense. Going back to the someone in the pub with his '£300 jacket'. Let's say he's a scam artist this time. He walks in and says here's my £300 jacket, and has planted a couple of his mates in the pub to talk it up, say how lovely it is (reminiscent of the Emperor's New Clothes isn't it?) and fool some mark into paying £300 for a £50 coat. If the mark buys, then he has lost £250. That is because the asset has a clear value: £50.

Back in the stock market, this fluctuation between confidence and panic would not be a problem if it was only one rogue scam artist - the problem for the stock markets is, this is the system.

It is for this reason that seemingly sensible, educated, intelligent people panic when anyone points out the Emperor's flies are undone, let alone that his willy is hanging out. So when AAA rated CDOs (£300 jackets) are pointed out to be near junk (£50 jackets) the system seizes up in the same way that the mark in the pub won't buy from the scam artist again.

On such occasions these same great brains (who never predicted this could happen) start using infantile playground language: warning against 'scaring off the confidence fairy' or 'talking down the economy' - as if a sound economy would collapse because someone says something negative. In the same way that most of us aren't reduced to gibbering wrecks because someone tells us 'you're a git', sound economies don't collapse because of a few words.

Of course in 2008 economies started collapsing for the very real reason that they were based on the valuation of scam artists. Governments around the world stepped in and guaranteed much of the scam artists' nigh on worthless assets.

The question is will the government (a la the mark in the pub) be fooled twice and bail out or will it learn from its mistakes and nationalise, control and operate their assets in the public interest - maybe ven taking on the mafia behind the scam artists (the bond markets)?

For those of a left-wing disposition shouldn't we be asking,'do we need a stock market?', 'shouldn't we shut it down?', when it simply serves to create destabilising panics and to distort the economy.