Detection of asset bubbles

One of the great struggles in the culture wars within the finance industry is the issue of what to do about asset bubbles. Greenspan and Bernanke (and others) have always argued that you simply cannot detect asset bubbles in advance and the best you can do is focus on how to clean up after them. Others vociferously argue that we can and must detect and prevent asset bubbles. A related issue is whether asset prices, particularly bubbles, should be included in inflation. The standard argument is that since asset prices are frequently volatile (falling sharply eventually even if they do rise sharply), it is best to simply exclude them. Most asset bubbles do not significantly affect the core financial system, the banks, so ignoring them has not traditionally been a problem, but in the most recent financial crisis the real estate bubble with its attendent bubble of mortgage-backed securities held by banks shows that even if most asset bubbles can be ignored, they cannot be completely ignored when they involve assets held by banks and other core components of the financial system. Nonetheless, the question of how to detect bubbles is still outstanding, not to mention the second question of what to do when they have been detected.

Many of the proponents of early treatment of asset bubbles are also proponents of the gold standard and opponents of fiat currency and simply believe that loose money is the cause of most asset bubbles and that the cure is simply to get back to a non-fiat currency. Obviously that is not going to happen. The net result is that most of the proponents of early detection and control are simply not offering any realistic proposal for early detection.

So, we remain without a credible proposal for detection (and then mediation) of asset bubbles.

Even if we cannot in general detect arbitrary asset bubbles, it seems quite clear that we really do need to prevent them in the core of the financial system.

One harsh alternative is to dramatically restrict the form of assets that banks can hold, so that asset price inflation becomes a non-issue for banks.

Banks traditionally held mortgages and loans, which gave banks an incentive to assure that the valuation of those assets was "safe". The advent of mortgage-backed securities and bulk rating and tranching of assets and availability of derivatives to "insure" against default allowed banks to lay off risk to the point where nobody thought they were responsible for the risk of the inflated asset prices. This enabled the development of an asset bubble in housing prices and cheap loans. The theory is that without all of these "innovations", banks would have simply ceased issuing mortgages as housing prices made the risks unacceptable, possibly simply raising rates incrementally as risk increased, so that eventually people could no longer afford them.

That still begs the question of how banks would have properly detected that housing prices were excessive.

Ultimately we need a mechanism for determining the value of an asset, as distinct from its market price.

One possibility would have been for banks or the rating agencies to simply look at a projected long-term value trend for the asset and raise yellow and red flags when the asset price rose too far above the long-term trend. I think this would in fact work for "real" assets such as housing.

Alas, even if such an approach worked for real assets, it would be quite problematic for non-real assets such as stock and bond prices, or even for hybrid assets such as futures and options for commodities. The classic case is a hot new company (ala Google) who has great but unproven future potential even if a short track record. How does one determine current value and project it into the future without resorting to unproven "innovations" in valuation? And for commodities, how does one distinguish the demand from speculators from the demand from real consumers of the actual commodities?

In summary, detection of asset bubbles in non-real assets such as securities and derivatives may be very problematic, but something does need to be done for the assets held by banks. Absent some better solution, the fallback should be that banks either cannot hold assets whose value (as opposed to price) cannot be determined, or to value those assets at a harcut to market price based on a projection of stable traditional prices, a surrogate for current "rational value."

For general asset bubbles, I would suggest that we develop models of realistic and acceptable asset price increases and then slap the "possible asset bubble" label on any asset that exceeds some standard rational price increase. Option pricing models might provide a model for how to calculate price changes which are outside of the range of believability. So, investors, traders, and speculators, and their management would suddenly see all of those flags starting to pop up when any market started to get too frothy. Risk management rules would then kick in for most organizations, cutting back on speculative demand. What we really need to do is look at the risk-adjusted price of an asset rather than the nominal market price. Show people their risk up front, in their faces, on each transaction and maybe then we might see some genuine behavioral change. Showing people book value would also help to give people visibility into their risk. Force traders to report their real risk and management would pay a little more attention. Force management to report real risk to regulators, and suddenly risk will start to become managed.

-- Jack Krupansky

ECRI Weekly Leading Index rises moderately sharply strongly suggesting that an end to the U.S. recession is now in clear sight

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose moderately by +0.81% vs. +0.03% last week, and its annualized growth rate rose sharply from -11.5 to -9.3, well above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains well below the flat line, its distinct upturn does strongly suggest that recovery is on the way.

According to ECRI, "With WLI growth climbing by 20 percentage points in 26 weeks, the economic growth outlook is getting steadily brighter."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports continue to show significant weakness, there is also a vast amount of potential stimulus (especially from the Federal Reserve) in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see further employment losses even as recovery is underway.

-- Jack Krupansky

Quotes from me in Bloomberg article on credit card reform

Bloomberg has an article by Alexis Leondis entitled "Credit-Card Consumer Protection Law May Reduce Purchasing Power" that quotes me concerning my views on the new law. The article opens with:

May 22 (Bloomberg) -- Jack Krupansky declared bankruptcy three and a half years ago. Now he worries the credit-card legislation Congress passed this week will make his banks, including Barclays Plc, penalize him as a riskier borrower.

"This legislation could boomerang and hurt the same people it's designed to help during the credit crunch," said Krupansky, 55, a freelance software developer in New York.

After discussing the new law and its potential impact, the article then notes that:

Krupansky is concerned the legislation will trigger a reduction in his $8,000 of available credit. He's already seen his Frontier Airlines-branded Barclay's card reduced by almost half.

He uses it and cards from McLean, Virginia-based Capital One Financial Corp. and HSBC Holdings Plc of London to pay for groceries, airline tickets, hotel reservations and online subscriptions.

I had already blogged my views in a post entitled "Are all of my credit cards about to go the way of the Dodo bird?!."

-- Jack Krupansky

FDIC extends temporary limit on deposit insurance of $250,000 through 2013

The temporary increase of the limit for FDIC deposit insurance to $250,000 was due to expire at the end of 2009, but has now been extended through 2013. As the FDIC announcement says:

On May 20, 2009, President Barack Obama signed the Helping Families Save Their Homes Act, which extends the temporary increase in the standard maximum deposit insurance amount (SMDIA) to $250,000 per depositor through December 31, 2013. This extension of the temporary $250,000 coverage limit became effective immediately upon the President's signature. The legislation provides that the SMDIA will return to $100,000 on January 1, 2014.

I don't even want to imagine how you would pronounce "SMDIA", but the extension is welcome.

And don't ask me why they do not make the increase permanent or even raise it to $750,000 or $1 million or even $5 million or $10 million just to completely eliminate the concern for all but the very richest Americans who can afford to pay professionals to shuffle money around between banks. Maybe... maybe the CDARS guys objected. CDARS is "okay", but results in lower yields.

-- Jack Krupansky

ECRI Weekly Leading Index rises slightly suggesting that an end to the U.S. recession is now in clear sight

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose slightly by +0.07% vs. +1.19% last week, and its annualized growth rate rose sharply from -13.6 to -11.5, well above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains well below the flat line, its distinct upturn does strongly suggest that recovery is on the way.

According to ECRI, "With WLI growth rising steadily to a 35-week high, it is increasingly obvious that the 'green shoots' will blossom this summer."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports continue to show significant weakness, there is also a vast amount of potential stimulus in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see further employment losses even as recovery is underway.

-- Jack Krupansky

Are all of my credit cards about to go the way of the Dodo bird?!

I agree that the credit card companies have a lot of horrendous practices. They always have, and maybe things are somewhat worse now, or so we think, but having said that, the simple fact is that many of us have learned to adapt to the mine field of crazy rules and even exploit and "game" the system to our own advantage. Although "reform" sounds great, my big worry now is that not only will I get hit with the unexpected consequences of "reform", but a lot of the marginal borrowers who actually need credit cards to finance short-term expenses (e.g., back to school, vacation, holiday gifts, auto and home repairs, etc.) may get hit very badly by reductions in credit and they are the exact people who need credit and help the worst. An article in The New York Times by Andrew Martin entitled "Credit Card Industry Aims to Profit From Sterling Payers" hinted at some of the downside we can expect from credit card "reform." The simple fact is that if the credit card companies are forced to give up fees and a chunk of interest, they will have no choice but to recoup those losses elsewhere which means three things: 1) less credit extended to marginal borrowers, 2) more marginal borrowers will get no credit, and 3) us squeaky clean "deadbeats" (industry term for those of us that the companies are not earning fees and interest from) will suddenly have to make up the difference with new fees and reduced credit.

I had serious income problems from 2002 to 2005 and managed to run up a real mountain of credit card debt. I finally filed for bankruptcy in the summer of 2005 and my debts (but not my back taxes) were discharged in late 2005. I didn't like all the fees for secured credit cards, so I waited and six months later started to get "real" credit card offers. I got three new unsecured credit cards by the end of 2006, with no annual fees (one has a fee, but they waive it each time I whine and threaten to close the account.) One even has 2% cashback on all purchases, with no minimum or limit. The credit limits are reasonable, but certainly not as high as before my bankruptcy. Overall, I am quite happy with what I have, especially considering the bankruptcy.

Now, with "reform" in the wind, my main concern is that the new rules put in place by Congress could hurt me even though I am not a big risk to anyone and have done no wrong in the past three and a half years. In particular, I feel that there is a strong possibility that:

1. My credit limits could be dramatically reduced.
2. Annual feels could return.
3. My 2% cashback could be slashed or even eliminated.
4. Grace periods could be shortened or even eliminated.
5. "Float" (charges after the statement cutoff date that are not due until the next statement due date) could be reduced or even eliminated.
6. As I am a freelance software developer and have not worked in the past six months, they might decide to cut my credit much further or even totally.
7. I may not be able to get new cards due to bankruptcy less than five years ago and unsteady income.

In all honesty, it would not take very many new "restrictions" to convince me to completely swear off credit cards and revert to a combination of cash and debit cards. Granted, debit cards have some disadvantages (no credit, no float, no easy way to dispute a charge before it is paid), but they are almost as good as credit cards for many purchases, provided you have the cash.

So, for me, I could accept that my credit cards could become "extinct", but I shudder to think about all of the marginal but nominal credit card holders who can least afford further restrictions on their credit. For me, cash is a trivial alternative and does not prevent me from spending, but for a lot of people the lack of credit would be a dead-stop for a lot of discretionary or even necessary expenses, especially for households "living paycheck to paycheck." It could well mean a 1% to 7% cut from GDP. Sure, we may be "better" off being less dependent on credit, but wouldn't it be a lot easier to run commercials and ads and train people to be more careful with their cards so that they can avoid the minefields in the first place?

Yes, there have been abuses and yes those abuses should be addressed, but the remedy should not be more onerous than the original problem.

The good news is that there may be a silver lining: new, company sponsored credit cards or hybrid debit cards might appear to fill the gap left by people who are either abandoned by or who abandon the bank-sponsored credit cards. Airlines, hotels, retailers, electronics companies, Internet companies, etc. may be able to subsidize the overhead of credit cards when conceptualized as loyalty cards designed to drive revenue rather than simple to collect fees as is done by the banks. In fact, after six months of no new credit card offers, I just received one the other day: from JCPenny (issued by GE Money Bank) -- and it is "Pre-Qualified" (but not pre-approved??).

So, in short, the banks are on thin ice. Sure, they can in fact make our lives more difficult, but there is a threshold beyond which they will suffer a lot more than us. Banks and other traditional credit card issuers may become the Dodo birds if non-banks ever figure out how to mimic banks closely enough to make banks completely unattractive to consumers and businesses.

So, subtle message to my own credit card companies: Be nice to me! Really nice to me.

-- Jack Krupansky

Monthly GDP for March rose by +0.2% (+2.4% annualized), Q2 tracking for a -1.0% annualized decline

Monthly real GDP, one of the five primary economic indicators that the NBER Business Cycle Dating Committee (NBER BCDC) uses to judge recession start and end dates, rose modestly in March by +0.2% or +2.4% annualized, after falling slightly by -0.1% in February (revised down from +0.6%), and real Q2 GDP is forecast to decline by -1.0% annualized, according to Macroeconomic Advisers (MA). The government does not publish GDP data at a monthly level, but the NBER Business Cycle Dating Committee says that they refer to sources such as Macroeconomic Advisers (MA) and their MGDP data series. As Macroeconomic Advisers summarized GDP for March:

Monthly GDP rose 0.2% in March following small declines in the two previous months and a large decline in December.  The modest gain in March was more than accounted for by nonfarm inventories, which contracted sharply in March, but not nearly as sharply as in February.  Partially offsetting this (and other minor positive contributions) were negative contributions from PCE, net exports, and the portion of monthly GDP not explicitly covered by monthly source data.  The March level of monthly GDP was 0.4% above the first-quarter average at an annual rate.  Average monthly declines of 0.2% per month through June support our latest tracking forecast of a 1.0% decline of GDP in the second quarter.

This report does not necessarily herald the return of happy days, but at least it is not indicating a worsening of the trend.

From the MA monthly data, I calculate that annualized real GDP fell at a rate of -5.5% in Q1 from Q4.

If the NBER BCDC is the definitive expert on marking of recessions, MA is the definitive expert on measuring real GDP at the monthly level with their MGDP data series.

-- Jack Krupansky

Book: House of Cards: A Tale of Hubris and Wretched Excess on Wall Street by William . Cohan

Today I was browsing through the new book table at Barnes & Noble near Lincoln Center and was fairly captivated by the level of detail about the run-up to the current financial crisis in House of Cards: A Tale of Hubris and Wretched Excess on Wall Street by William D. Cohan. I leafed through the book and found a lot of fascinating information about what was going on at Bear Stearns, whose former building is pictured on the cover:

At 480 pages, this is not a light read, but I doubt that you could claim to really know what was going on in the run-up to the crisis without digesting the contents of this book.

How could Bear Stearns go from having $17 billion in cash to being insolvent almost overnight? Of course, we now know that liquidity is not the same as solvency and that "toxic" assets can cause liquidity of a bank to drain at warp speed.

I have not read the book other than a few pages here and there, but it definitely seems worth taking a look at.

This book is "a chilling cautionary tale about greed, arrogance, and stupidity in the financial world."

Alas, even the collapse of the Bear Stearns house of cards was not the final straw. We had to wait for Lehman Brothers to implode before the camel's back was completely broken and the last remaining cards came tumbling down. Still, if more people had a clearer view of what happened at Bear, maybe Lehman could have been saved and the rest of the financial system spared a brutal shock. Maybe, or maybe not.

-- Jack Krupansky

ECRI Weekly Leading Index rises sharply suggesting that an end to the U.S. recession is now in clear sight

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose sharply by +1.25% vs. +1.48% last week, and its annualized growth rate rose sharply from -15.6 to -13.6, well above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains well below the flat line, its distinct upturn does strongly suggest that recovery is on the way.

According to ECRI, "With the level of the WLI climbing to a 28-week high over the last nine weeks, the light at the end of the recession tunnel is getting brighter."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports show significant weakness, there is also a vast amount of potential stimulus in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see employment losses even as recovery is underway.

-- Jack Krupansky

ECRI Weekly Leading Index rises sharply suggesting that an end to the U.S. recession is now in clear sight

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose sharply by +1.47% vs. +0.46% last week, and its annualized growth rate rose sharply from -17.5 to -16.1, moderately above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains well below the flat line, the distinct upturn does strongly suggest that recovery is on the way.

According to ECRI, "The level of the WLI is fast approaching a six-month high, making it increasingly likely that the U.S. recession will end this summer."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports show significant weakness, there is also a vast amount of potential stimulus in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see employment losses even as recovery is underway.

-- Jack Krupansky

Made my Kiva micro-loan for the month of May

I made a new micro-loan through Kiva for the month of May. My intention is to make a new micro-loan every month, in large part from repayments for past micro-loans.

This one was for a weaver in Guatemala who makes women's clothes. It is a 14-month micro-loan for a total of $300, of which I lent $25. Its first repayment is scheduled for July 2009. The micro-loan was already disbursed to the micro-entrepreneur on April 24, 2009 by the local partner. Kiva is raising funds to essentially buy that loan from the local partner.

Here is my Kiva public lender page: http://www.kiva.org/lender/JackKrupansky

Note: This is all real and good, but these micro-loans do not net any interest to us micro-lenders. Kiva's fine print:

Lending to the working poor through Kiva involves risk of principal loss.
Kiva does not guarantee repayment nor do we offer a financial return on your loan.

Still, at least we know our money is really helping somebody better their lives in a visible way rather than put the money in a bank account or money market fund where who knows what it helps to pay for or what good it does and for only a few pennies of profit in our pockets.

-- Jack Krupansky

Status of GMAC Bank if GM files for bankruptcy

Although bankruptcy of GM is still not assured, it is a distinct possibility. That raises the question of the financial status of GMAC and GMAC Bank, and deposits held in accounts at GMAC Bank. Worst case, FDIC insurance is in effect up to the $250,000 limit, no matter what happens with GM and GMAC, so there is no "worry" about money held in GMAC Bank deposit accounts (up to that $250,000 limit.) Nonetheless, it is interesting to ponder where that insured money will end up if GM itself goes under or is reorganized in bankruptcy.

GMAC Bank is simply a bank that happens to be owned and controlled by GMAC. There are regulators who monitor the solvency of the bank.

GMAC is now a bank holding company, which is a bit more messy than a simple "bank" bank.

Conceptually, it is very possible that GMAC Bank might be completely untouched even if GM goes into bankruptcy and reorganization. Ditto with GMAC, but my hunch is that there are liabilities within GMAC and GMAC would need to be reorganized in bankruptcy of GM.

If GMAC itself were to be reorganized away, the status of GMAC Bank would depend solely on its own solvency and not the solvency (or insolvency) of either GM and GMAC.

It is possibly that GMAC Bank could in fact become a standalone bank, or maybe more likely that some larger bank would acquire them and merge all of their assets and liabilities.

It is also possible that GMAC could become a standalone bank and maybe then their banking regulators might decide to close them (e.g., if they have too many GM or GMAC assets that decline in value or become worthless) and either sell the deposits to another bank or pay them off by check. Either way, deposits are protected by FDIC insurance.

There are all sorts of variations possible, but at the end of the day FDIC insurance is still FDIC insurance, so that depositors at GMAC Bank (including me) need not worry about funds below the regulatory $250,000 limit.

The only real downside for any of us GMAC Bank depositors is that if our accounts do end up at another, healthier bank, our interest rates would likely fall sharply from the current 2.25% for online savings.

I would note that SmartyPig.com is paying 3.05% APY FDIC-insured for online savings. Oink! Oink! [No reports of any swine flu, so far.] So, fresh money would find a better home there than at GMAC Bank.

-- Jack Krupansky

PIMCO's Bill Gross: Two plus two is still four

Bond guru Bill Gross of PIMCO has released his latest Investment Outlook, for May, entitled "2 + 2 = 4" which basically reminds us of classic advice of uber-investor Bernard Baruch during the Roaring 20's stock market that "two plus two equals four and no one has ever invented a way of getting something for nothing" and then a few years later in the depths of the depression a variation of the same advice: "Two plus two still equals four and you can't keep mankind down for long." As Bill puts it:

... his words, first of caution and then of optimism, typify the way that fortunes were, and still are, made in the financial markets: Get your facts straight, apply them to the current valuation of the market, take decisive action, and then hold on for dear life as the mob hopefully comes to the same conclusion a little way down the road.

Bill refers to several "demarcation points" (inflection points?) in recent decades and alerts us that:

2009 is a similar demarcation point because it represents the beginning of government policy counterpunching, a period when the public with government as its proxy decided that private market, laissez-faire, free market capitalism was history and that a "private/public" partnership yet to gestate and evolve would be the model for years to come. If one had any doubts, a quick, even cursory summary of President Obama's comments announcing Chrysler's bankruptcy filing would suffice. "I stand with Chrysler's employees and their families and communities. I stand with millions of Americans who want to buy Chrysler cars (sic). I do not stand…with a group of investment firms and hedge funds who decided to hold out for the prospect of an unjustified taxpayer-funded bailout." If the cannons fired at Ft. Sumter marked the beginning of the war against the Union, then clearly these words marked the beginning of a war against publically perceived financial terror.

The term "financial terror" certainly captures precisely how a lot of people feel about what has happened on Wall Street.

He refers to government involvement as a redistribution of wealth and tells us that it will inevitably lead to slower growth:

... as wealth is redistributed, and the invisible private hand of Adam Smith begins to resemble more and more the public fist of government, then asset values should be negatively affected. First comes the haircutting and burden sharing, most recently evidenced by Chrysler and soon to be played out via the stress testing and equity dilution of government ownership of ailing banks. In those footsteps, however, will follow a slower rate of economic growth, not just in the U.S., but worldwide as heretofore libertarian capitalism is bridled, saddled and taught to trot instead of gallop over the investment plains.

He once again reminds us of risk:

Capitalism is about risk taking and if you're not a risk taker, you should have your money in the bank, Treasury bills, or a savings bond, not the levered investment of a bank or an aging automobile company. Let there be no company too big, too important, or too well-connected to fail as long as the systemic health of the economy is not threatened.

Alas, he does not delve into the nature of detecting (in advance) the negative condition of an institution of "as long as the systemic health of the economy is not threatened." That is the trick that "the authorities" face. For example, is GM a threat to "the systemic health of the economy"?

-- Jack Krupansky

ECRI Weekly Leading Index rises moderately suggesting that an end to the U.S. recession is now in clear sight

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose moderately by +0.50% vs. +0.03% last week, and its annualized growth rate rose sharply from -18.6 to -17.4, moderately above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains well below the flat line, the distinct upturn does strongly suggest that recovery is on the way.

According to ECRI, "With the level of the WLI in an upswing for seven weeks now, an end to the U.S. recession is now in clear sight."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports show significant weakness, there is also a vast amount of potential stimulus in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see employment losses even as recovery is underway.

-- Jack Krupansky

ECRI Weekly Leading Index rises moderately and continues to show a hint of light at the end of the tunnel

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose moderately by +0.50% vs. +0.03% last week, and its annualized growth rate rose sharply from -18.6 to -17.4, moderately above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains well below the flat line, the distinct upturn does strongly suggest that recovery is on the way.

From last week: According to ECRI, "With WLI growth rising to a 27-week high, U.S. economic growth, which is now at a record low, will soon begin to improve."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports show significant weakness, there is also a vast amount of potential stimulus in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see employment losses even as recovery is underway.

-- Jack Krupansky