Friday, February 19, 2010

The New Normal: high unemployment

In taking another stab at our world view, to suggest what the media may need to survive, we cannot dismiss the toxic recession we're in, and its aftermath effects on our society.

(Obama's view, pessimists see 2020 as the year we reach 5% unemployment)

According to Don Peck's "How a New Jobless Era Will Transform America", the current recession is expected to extend itself into a prolonged slow recovery, snail pacing the creation of jobs, a daunting task if we consider the millions that will have to be (re)employed to achieve normalcy, at 5% unemployment.

The jobless and their disintegrating families will be left with deep scars. The young from the poor neighborhoods, whom after losing all hope, lose their opportunities by caving into drug dealing or addiction. Those suffering from the trauma of an extended spell of job loss, even if employed later on, will feel that they have no hope, nor their children, of ever recovering their past opportunities.

What does this all mean for us?

First of all, we have to recognize that the future will look dimmer for most of us mortals, but it also means, that the recession is undoubtedly accelerating the Darwinian process of eradicating the ill adapted (media) institutions out of this rapidly changing environment.

"Welcome to the New Normal", as John Mauldin so fittingly coins this new high unemployment era.

Interview with Mish Shedlock

Second, we have to recognize and persist in reporting the big story of our time: China.

The story is simple. China has cheap labor, by now probably around 15% of the cost of US wages. This imbalance, which is fostered by the Chinese government through currency manipulation, will continue to wreck havoc in the west until wage equilibrium is achieved.

That's why the recovery will be slow. Ask yourself, where is investment likely to find a home? Not in the west, but in China, where their own government attempts at stopping the incoming flow of investment, to avoid overheating their economy, have failed.

Next, the highly corrosive environment leaves little time to mend our ways and find solutions.

Finally and most importantly, journalists will have to find in their (hearts and) voices a way to raise the west's broken spirits.

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