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Spain: Too Big to Fail and Too Big to Save

By John Mauldin - April 17, 2012

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The New Labor Force

I will end this letter with the beginning of what I intended to write originally and hope to finish next week. Work and employment is changing before our eyes in the US and much of the developed world. As the Baby Boomer generation reaches retirement age and finds out that either it cannot afford to retire or does not want to retire, the "trickle-down" effect to younger workers is starting to become apparent in the data.

Let's look at three charts (hat tip to John Hussman, who called this to our attention and got me looking at the details). The first shows the employment level in the US for the last five years. The gray area is the official period of recession. Employment growth since the end of the recession has been only a few hundred thousand jobs a month; but since employment is a lagging indicator, you can claim that we have recovered 4 million jobs since the employment bottom in late 2009 or about 2 million jobs since the third quarter of 2009. It all depends on where you want to start your count. But we are still down roughly 4.5 million jobs since the beginning of the recession. This has been the slowest "recovery" since the end of WWII.

Now let's look at the next chart. This is the employment level for those over the age of 55. Notice that it kept rising all through the recession and especially after. People over 55 have seen their total employment level rise by about 4 million jobs since the beginning of the recession, and over 3 million jobs since the third quarter of 2009. Almost any way you look at it, those over 55 have seen their jobs level improve over those who are younger. If you take the end of the third quarter as your marker, the Boomer generation has seen its jobs level rise by 3 million, while overall jobs rose by just 2 million! Those who are younger are actually falling behind!

And once last chart before we go. Last week we looked at how the civilian participation rate (the percentage of the population who have a job or want a job) for the US has been falling for a decade and especially since the end of the recession. You can attribute a high percentage of the apparent decrease in unemployment to the fall in the participation rate.

Except for one group or cohort. This next chart is the participation rate of those over 65. Their participation rate is rising. The graph is "noisy," but the trend is clear. Whether willingly or out of necessity, older workers are staying longer in the work force. And given the rather lackluster employment growth, they are taking jobs that would normally go to younger workers, which is why we are seeing higher rates of unemployment among the latter. We will go into the why of that next week, but a great deal of it has to do with work skills.

A Little Blue Suede Shoe Trouble

My travel schedule is rather hectic, and I will be on the road some 22 out of the next 26 days. Only in the US, which is easier on my body, but air travel has long lost its romance. Airport security can take the fun right out of travel, not to mention the time. Today I was lost in thought, thinking about this letter as I stood in line. I went through the drill, as I have done hundreds of times, taking out the laptop, taking off the coat and shoes, emptying the pockets, etc. Except this time I forgot the shoes. I went right on through the line with the new body scanners (which for some reason I don't like), then began to collect my gear and noticed my shoes were not in the tray. (And yes, these are the very same blue suede shoes that Swedbank bought me a few weeks ago in Stockholm, when my bags were lost. I have found them to be quite comfortable and stylish travel shoes.)

So I looked down. I was still wearing them. I laughed and remarked about it to the security guy at the tail end of the line and began to leave, when suddenly they stopped everything. Seems I had found a particularly zealous security person. Not only did I have to take off my shoes, but I had to go back through security and get scanned all over again. Next time I will try being funny with a more amenable crowd.

It is time to hit the send button. It is once again late, but I get to sleep a little later here in Frisco, so I can adjust. Have a great week.

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Editor's Note: This content was taken from John Mauldin's weekly E-Letter, Thoughts From the Front Line. See more at John's home page. 

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