Angry young men

Pinchas Landau/ By Pinchas Landau/
Most, although not all, major stock indexes in the US made new highs earlier this week and may make even newer before the week is out. In the case of the Standard and Poor’s 500 Index, this was a(nother) all-time high. In the case of the Nasdaq Composite Index it was merely a 13-year high. Other, less well-known indices were also powering ahead – as were their European peers, although in their cases, the highs were mostly of much shorter vintage. But the German stock exchange is not far from its all-time high, recorded in 2007 and the UK market is also within hailing distance of record levels.


Records of a different nature are being set in another important economic variable, this time primarily in Europe. The market in question is the labor market and the records in question relate to the levels of unemployment being recorded in most – but not all – European countries.  “The number of unemployed Spaniards has risen beyond 6m for the first time since records began, underlining the depth of the country’s economic suffering”, reported the Financial Times last Saturday, adding that “France also reported record unemployment figures on Thursday, with the number of job seekers without any work rising in the 23rd month to 3.2m in March, surpassing a previous peak in 1997.”

Implicit in these data is that the rate of unemployment is much higher in Spain than in France, but the country at the top of this poisoned league is Greece, where the rate – according to the EU’s statistical bureau Eurostat, jumped last month to 27.2% of the overall workforce. That is a totally horrendous figure, but it is secondary in its impact and implications when compared to the level of unemployment measured among Greeks in the under-25 age group, which now stands at 59.1%.

Today (Friday), the latest US unemployment figures will be published. Three things are certain about them: one is that the rates will be far lower than in Europe, where the overall rate in the eurozone area climbed in March to 12.1% – although in the ‘German bloc’ of Germany, Holland and Austria the rates are around 5-6%. The second is that real rate in the US, after taking into account various distortions in the way the data are defined and presented, is much higher, although still  much lower than the equivalent ‘real’ data in Europe. Finally, it is important to note that on the basis of an historical comparison, the American labor market is in appalling shape and the trends at work are extremely worrying. Comparisons with southern European countries should not be thought about, let alone mentioned.

Even within Europe, it is ultimately pointless to try and compare degrees of woe. Obviously, Greece is a special case, but Spain (and Portugal, at a ‘mere’ 17.5%) are not much better off. However, French people in general, and French youth in particular, are not impressed or mollified by their relative status. They see no future – and, unlike, the smaller and more traditionally mobile populations of Greece and Ireland, their accustomed response to a depression is not to emigrate en masse. Indeed, the world offers no haven for mass emigrations – we are not in the late nineteenth century.

The traditional response of large numbers of angry young men who have nowhere to go and nothing to lose is to rise up in revolt. If the leaders of the European countries cannot offer their young people any kind of decent future – and it’s clear that they can’t – the inevitable result will be a socio-political explosion. This is what European history suggests and it is what current affairs in North Africa presents.

The fact that mass unemployment, growing deprivation and, indeed, real hunger, are proliferating in the same countries and capitals that stock markets are soaring and bond prices, too, are at record levels, means that the monied classes in those countries are not only untouched, but are actually getting richer as their fellow-citizens sink into poverty and despair. This will not assuage the anger and frustration of the masses, but is more likely to stoke it. The wealthy, however, are not stupid – and they can remove themselves and/or their wealth from the likely line of fire, and that is what they are doing. Israel, by the way, is one of the beneficiaries of this flow of capital, but that’s another story.

The financial systems and economies of most of the countries in the developed world are being systematically distorted to achieve policy goals that serve the interests of the governing elites. Neither the economies, not the people who live and try to work in them can stand up to the strains being placed upon them. The unemployment data, imperfect as they are, are the measuring rod of the strain.

Courtesy of  Pinchas Landau

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About the Author

- About Pinchas Landau is an economic and financial analyst, serving as a consultant to major financial institutions in Israel and abroad on domestic and global developments. After working in banking and investment, he moved to journalism in 1983 and served as financial correspondent of the Jerusalem Post and then as senior columnist for Globes, Israel’s business daily. He has written for many international newspapers, including the Wall Street Journal and Barrons, as well as numerous professional publications. Since 1996, Pinchas has been writing and publishing The Landau Report, a unique newsletter service which analyses economic, business and financial trends in Israel, as well as tracking Israeli and regional geo-political affairs and has attracted a global subscriber base. He has also been providing quarterly and annual reports on Israel for the Economist Intelligence Unit for 25 years. Landau is also an accomplished speaker, lecturing in English and Hebrew to audiences in Israel and overseas on a range of issues relating to Israel and the Jewish world. Born in London and educated at the London School of Economics, he and his family have been living in Jerusalem since 1976.

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