Bad Jobs Data and Hungary Debt Crisis Triggers Market Failure
By: Anthony Cherniawski
Jun 05, 2010
Employment Situation: Less than meets the eye. Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. Private-sector employment changed little (+41,000). Manufacturing, temporary help services, and mining added jobs, while construction employment declined. The unemployment rate edged down to 9.7 percent.
The numbers given by the Bureau of Labor Statistics don’t even pass the basic math test. To top it all off, inside these figures is the CES Birth/Death Model, which added 215,000 fictitious jobs in May. Could the real employment situation have a loss of 216,000 jobs last month? In addition, the May figures showed the labor force shrank 322,000 due to discouraged people leaving the work force.
A debt crisis in Hungary.
Credit-default swaps on sovereign bonds surged to a record on speculation Europe’s debt crisis is worsening after Hungary said it’s in a “very grave situation” because a previous government lied about the economy.
Hungary’s bonds fell after a spokesman for Prime Minister Viktor Orban said talk of a default is “not an exaggeration” because a previous administration “manipulated” figures. The country was bailed out with a 20 billion-euro ($24 billion) aid package from the European Union and International Monetary Fund in 2008.
Market failure…is the trap door swinging open?