You may have heard analysts and pundits on CNBC and in Barrons stating that credit is starting to thaw out. This is nonsense.

First of all, money continues to flow into Treasury money market funds at a faster pace than it’s flowing into traditional money market funds. This is bad news because traditional money market funds buy the type of credit known as "commercial paper" that’s essential to providing working capital to corporations like General Motors. The fact that there’s still so much risk aversion to traditional MM funds despite government guarantees is frightening.

The commercial paper market would still be completely closed if it weren’t for government intervention. Earlier this week, some equity analysts were crowing that $99 billion in commercial paper was sold in late October and another $150 billion was sold last week.

These analysts apparently never bothered to see who was doing the buying. With little exception, it was the Federal Reserve, which now owns something like 15% of the CP market while every other major private-industry player has been a massive seller.

Brian Reynolds of WJB Capital observes that by propping up the CP market the Fed is preventing a wave of corporate collapses. But now as each week goes by and the paper matures, the Fed must buy more and more of it until real-money buyers return. We’ll have to see how much its balance sheet can withstand while already staggering under $2 trillion in new obligations.

Meanwhile, with many bank loans trading at stunning levels of around 70 cents on the dollar when they trade at all, the credit markets are forecasting a wave of bankruptcies and trouble among bond holders. Until private buyers come back to buy commercial paper and start to bid up the price of loans, the credit market remains anything but unfrozen and that portends poorly for equities.

Bad Jobs

The Bureau of Labor Statistics’ monthly unemployment report came out last week, and as you probably know it wasn’t real pretty. Stocks ultimately traded up on the day, but for unrelated reasons. As always at this time in the month, we’ll turn to the great labor analysts Philippa Dunne and Doug Henwood for their take on the report:

First, the pair note that as bad as the October report was, it could have been worse. Private sector employment is now down to where it was more than two years ago, and the share of the adult population working is the lowest it’s been since 1993.

October’s headline job loss of 240,000 was bad enough, but the previous two months were revised down by 179,000. September’s loss is now 284,000, which is recession territory. Job losses over the last three months alone are 651,000, which equals about two-thirds of all the gains in 2007. Total employment is down 1.2 million from December’s peak. Almost two-thirds of the private sector losses are in goods production. Services are making a contribution too, as retail is responsible for more than one in five job losses this year, Dunne and Henwood note.

Job losses in October were widely distributed. Construction lost 49,000 (evenly divided between residential and commercial); while manufacturing lost 90,000. Wholesale trade was off 22,000; retail, off 38,000 (more than half from car dealers); finance, off 24,000; professional and business services, off 45,000 (three-quarters from the temp sector); leisure and hospitality, off 16,000. Bars and restaurants, once a hearty job producer, shed 11,000. The few positive sectors included government, up 23,000 (thanks mainly to strength in local education); health care, up 26,000 (3,000 below its average over the last year); and utilities, up 2,000. That about does it for the positives.

Yearly job losses in private services, 0.4%, now match the worst of the 1982 recession and exceed the worst of 1975. That’s a stunner. The service sector didn’t use to be so cyclical, according to Dunne and Henwood’s data.

Average hourly earnings were up 0.2%. Hourly service wages are now a nickel higher than manufacturing, which is remarkable. Though workweeks are shorter in services, making for a lower annual service wage, this would still be news to most people.

The employment/population ratio fell 0.2 point to 61.8%, its lowest level since October 1993. That means that the combination of two recessions and an anemic expansion since the 2001 peak has entirely reversed the jobs boom of the second half of the 1990s.

The unemployment rate rose 0.4 point to 6.5%, the highest since 1994. The rise in the number of unemployed was totally accounted for by permanent job losers; those on temporary layoff actually fell. The broadest measure of the unemployment rate, the so-called U-6 rate (which accounts for discouraged workers and unwilling part-timers), rose 0.8 point to 11.8%, matching the highest level since the series began in 1994; a year ago, it was 8.4%.

So, how much worse will the employment picture get, and how long will it take to get there?

Dunne and Henwood note that with another 350,000 job losses we’ll be at the worst of 1990-91 and 2001 recession lows. But as you can see in the BLS chart above, which tracks the unemployment rate since 1965, matching the 1973-75 recession would take another 1 million job losses, and matching 1981-82 would take 3 million. Those two latter downturns were 16 months long, while this one is 10 months old. So it’s fair to guess that the current downturn is possibly halfway done. Let’s hope the massive amounts of stimulus en route from Washington will help us avoid 1981-level outcomes.

This article was written by Jon Markman, contributor to InvestorPlace Media. For more actionable insights like this, visit www.InvestorPlace.com.