Hidden Unemployment

The welfare and social security benefits they enjoyed in the past have had to face reality
checks as well. Even the formerly powerful unions, where they still had any clout, had to
accept significant cuts in exchange for keeping jobs and new hires. Now that Yellen is
urging at least two more interest rate hikes, the financial and economic picture is
approaching an eerie similarity to 2007.
Then, as now, many banks are overleveraged in derivatives. It will take just one event, a
black swan that nobody has foreseen, to send the whole market crashing, and the
economy with it. In 2008, the unemployment rate spiked from about 4.5% to 10%
overnight. The very same could happen next month or next year.
The crucial point is that nothing has changed to avert a catastrophe, and the next crisis
could hit harder than previous ones. In 2017, compared to 2008, salaries, wages, and
benefits have been resized (shrunk). There’s also more precarious—or Uberized—
employment than before. Discontent is already high. The market gains are benefiting an
ever-smaller group of people, who always seem to get richer.
Add to this the increase in personal taxes. Meanwhile, so-called blue-collar jobs have
moved to countries where wages and other production costs are lower. Trump has been
trying to bring some of the jobs back, but the numbers are too small to make a
significant dent. Meanwhile, labor costs have become so competitive internationally that
even Chinese companies are outsourcing!
But Trump hasn’t got all the answers either. His protectionist prescription for the
economy could end up causing a global recession. To really change the employment
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