It’s Not About Jobless Claims Today, It’s About What Will Hamper Job Growth In A Few Months

Without a stable financial system, or even the widespread appearance of stability in it, this is what happened to the suddenly jobless:

Like the undead themselves, they disappeared from the official unemployment statistics (the denominator) because they stopped looking for work they knew didn’t actually exist and wouldn’t show up (all the while Fed policymakers called them lazy drug addicts; R*). The US (and the rest of the global) economy still hasn’t worked its way out from under the labor costs produced by GFC1 even though it happened more than a decade ago!

Thus, the prospects for a quick and complete turnaround this time continue to dim the longer and the deeper GFC2 unnecessarily binds the whole global system. If Bernanke’s failure to stem and solve GFC1 ended up costing the labor market what you see above, just how much will Powell’s GFC2 end up destroying?

The Federal Reserve has shot all its bazookas, from endless QE to unlimited “repo” operations and finally overseas dollar swaps. Doomed to failure, all of it; the dollar swaps supposedly such a big piece aimed at fixing the global part of the dollar shortage have been open and operational this whole GFC2 just like GFC1. What good were they?

Despite (or maybe because of) Jay Powell’s claims of boldness, the world’s dollar (and related collateral) problems haven’t budged. If anything, this week while stocks are bouncing (dip buyers are a determined bunch of FOMOs) the global dollar shortage goes nuclear.

Three-month LIBOR jumped more than 10 bps yesterday, while fed funds, repo, and LIBOR’s rejected replacement SOFR all went further downward; according to FRBNY, which is responsible for calculating the reject, SOFR is an outwardly pleasant 0.1%.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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