Ignore The Truth, Pay the Consequences

Layoffs rise 68 percent in April vs March: survey
NEW YORK (Reuters) - U.S. companies' planned layoffs jumped 68 percent in April from the prior month to the highest since September 2006, pointing to further deterioration in the labor market, a report showed on Thursday.

Planned job cuts in U.S. companies totaled 90,015 last month, up from 53,579 in March and up 27 percent from a year earlier, employment consulting firm Challenger, Gray & Christmas Inc. reported.

The financial services industry announced 23,106 cuts in April with almost half of them occurring in a two-day period that saw hefty planned layoffs from Citigroup (C.N) and Merrill Lynch (MER.N), it said.
http://news.yahoo.com/s/nm/20080501/bs_nm/usa_economy_jobs_challenger_embargo5_1_dc


Employers cut fewer jobs in April, jobless rate falls
WASHINGTON (AP) — Employers cut far fewer jobs in April than in recent months and the unemployment rate dropped to 5 percent, a better-than-expected showing that nonetheless reveals strains in the nation's labor market.

For the fourth month in a row, the economy lost jobs, the Labor Department reported Friday. But in April the losses totaled 20,000, an improvement from the 81,000 reductions in payrolls logged in March. Job losses for both February and March turned out to be a bit deeper than previously reported.

On the jobs front, construction companies slashed 61,000 positions in April. Manufacturers cut 46,000 and retailers got rid of 27,000. Those losses were eclipsed by job gains in education and health care, professional and business services, the government and elsewhere.

The job losses came in areas hardest hit by the housing and credit debacles. The fact that fewer job cuts were ordered in April raised hopes that damages could be limited.
http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD90DI75O0

I'm sorry, I can't help but notice a, um..., contradiction here. Has nobody out there in LaLa Land figured out yet that the US Government is absolutely FULL of Shhhhhhhhhhh....it when it comes to their "official statistics". Clearly there is no truth is Washington. History will tell us years from now that "truth" was the biggest casualty of the American Century. In time the "economic boom" of the 90's will be know as The Great Charade: Crushed Under An Avalanche Of Debt.

"There are three kinds of lies: lies, damn lies, and statistics." -- commonly attributed to Benjamin Disraeli

Lies and Other Statistics
By: John Mauldin, Millennium Wave Advisors
If we are to believe the government statistics, the GDP of the US grew by 0.6% in the first quarter of this year. And unemployment actually fell. And there were only 20,000 job losses.

The Bureau of Economic Analysis (BEA) of the Department of Commerce publishes the GDP statistics. They tell us the US economy grew by 0.6% in each of the last two quarters. They come by that number by taking the nominal or "current dollar" measure of the economy and subtracting their figure for inflation, which gives us "real GDP," or after-inflation GDP.

Nominal GDP in the fourth quarter grew by 3%. In the first quarter it was 3.2%. They figure that inflation was 2.4% in the fourth quarter and 2.6% this quarter, giving us the slightly positive growth numbers.

There are several government agencies which track inflation. And in fairness, inflation in an economy as large as that of the US is a very tricky thing to measure. The Consumer Price Index (CPI) is done by another division of the Department of Commerce, the Bureau of Labor Statistics. Let's look at what they calculate inflation to be since last August...

...the average for the 4th quarter was 4%, while for the first quarter of 2008 it was over 4.1%. Never mind whether that is the right number or whether there are problems with how they calculate it -- that is a story for another letter. The key here is that if the BEA used the BLS number (remember, both groups are in the same Department of Commerce), it would show the economy shrinking by 1% in the 4th quarter and by almost 1% in the first quarter. That is not what the happy-talk analysts are saying.

But let's use the Fed's favorite measure of inflation, personal consumption expenditures, or PCE.

If we use the PCE numbers (yet another measure using Commerce Department data), inflation was about 3.3% for both quarters, which would mean negative growth quarters by a few tenths of a percent. That would also mean two quarters of negative growth and a recession.

Further, GDP in the first quarter was helped by inventory build-up to the tune of 0.8%. In times of expansion it is good to see inventories grow, as that means companies are optimistic. But when the economy begins to slow, growing inventories mean that companies anticipated sales that did not materialize. That means that as inventories are allowed to fall in the second quarter, they will show up as a negative factor in second-quarter GDP.

Honey, I Blew up the Employment Numbers

...the monthly employment report. It is one of the most revised reports released by any government agency, and for some reason the market seems to react to it like it means something immediate.

Let's take today's release. It showed a drop of only 20,000 jobs, well above the more negative consensus. The market immediately rallied, taking the thought that the economy may be on its way to recovery. But when you look at the numbers, that optimism evaporates.

The birth/death ratio is the BLS's (Bureau Of Labor Statistics) attempt to figure out how many jobs were created by small businesses that do not show up in their survey of established businesses. It is a simple estimate based on past trends. You have to have this estimate to have any hope of getting the actual number right. And most of the time, the estimates are pretty good. Over time the numbers are revised and in a few years will be pretty close. But in times when the economy is slowing down, the birth/death ratio tends to overstate job growth because the trend is backward-looking. This month's birth/death number was particularly egregious.

April, for whatever statistical reason, has shown the highest number of birth/death jobs for any month. In 2007, the BLS estimated that 262,000 were created in April that they could not account for in the survey of businesses. Somehow, the spreadsheets at BLS had them add 267,000 jobs in April of 2008. That number includes an estimated 45,000 new jobs in construction! And this in a time when both residential and commercial construction are contracting. The actual survey results showed that construction jobs fell by 61,000.

And somewhere, they estimate that 8,000 new jobs in finance were created. As Philippa Dunne notes: "It may be that the gains in our old friend, bars and restaurants, are the [birth/death] model's creation; it added 83,000 to the leisure and hospitality sector. With vacation plans at near-record lows, and restaurants reporting reduced traffic, many of these job gains could disappear in the next benchmark revision."

Without that addition from the birth/death number, total private employment would have dropped by 296,000. Now, if that had been the headline number, the market would have tanked. Now, I have no doubt that the economy did create a lot of new jobs last month. But when the final revisions are in, we will see that job losses were well south of 100,000.

This employment report was ugly, when you look at the numbers under the headline statistics. It is no wonder consumer sentiment is down.
http://news.goldseek.com/MillenniumWaveAdvisors/1209955281.php

John Mauldin's essays are always great reads, very insightful. The man is a most powerful Bullshit Detector, I recommend you read him regularly. After reading his "explanation" of Friday's revered Non-farm Payrolls Report it really makes you stop and wonder how this "report" has been raised to such a high pedestal of importance as an economic indicator. How the entire sentiment of the World's stock markets, let alone those in the US, can be influenced by such a bogus and flawed report completely escapes me. Honestly, it is not a secret how the Non-farm Payrolls Report comes by it's statistics, yet the numbers contained in it are taken as gospel the first Friday of every month.

If the average man in the street wasn't so completely ignorant and uneducated, there would be riots in the streets over the inflation in this country...perhaps soon there will be. Everybody you stop and ask can tell you it costs more to fill their gas tank, fill their stomachs, and fill their prescriptions, but few can comprehend the scope of the economic catastrophe unfolding right in their face every day. The sheep are being led to slaughter. Their leaders, and wannabe leaders, want the sheep to believe that it is "Big Oil", and the "speculators on Wall Street" that are destroying their lives, when in fact it is their "elected shepards", the politicians the sheep flippantly elect to serve the herd, that are leading them to financial ruin.


Fed Revs Up Lending in Latest Jolt to Credit Market
May 2 (Bloomberg) -- The Federal Reserve, seeking to prevent a deeper economic slowdown, took another stab at coaxing banks into lending at lower rates.

The Fed boosted its biweekly Term Auction Facility sales of cash to banks by 50 percent to $75 billion and expanded the collateral it takes from bond dealers through loans of Treasury securities. It also raised the amount of dollars it makes available to the European Central Bank and Swiss National Bank through swap lines to a combined $62 billion from $36 billion.

``The world is awash in liquidity, it just isn't reaching the right financial borrowers,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``Today's action from the central banks is another strong dose of medicine that will help cure what ails the credit markets.''

Today's decision comes two days after the Fed's interest- rate setting Open Market Committee lowered its benchmark rate for a seventh time since September, while signaling it's ready to hold off on further cuts.

The TAF, which provides 28-day loans to commercial banks, will sell $75 billion in auctions every two weeks, starting with the May 5 operation, the Fed said in the statement. The decision will increase the amount outstanding under the auctions to $150 billion from $100 billion.

It's the third increase since the program started in December at $40 billion per month.
http://www.bloomberg.com/apps/news?pid=20601068&sid=aTNWHKv5CoPw&refer=home


Fed likely to prefer lending over interest-rate cuts
NEW YORK (AP) -- The Federal Reserve's decision Friday to lend more to banks may be a sign that policy makers want to avoid cutting interest rates any further, as they combat a credit crisis that is far from over.

The Fed said Friday it would boost the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, from the $100 billion it supplied in April. The Fed took this action and several other moves to boost credit in coordination with the European Central Bank and the Swiss National Bank.

The Fed has committed about $600 billion in loans to banks, an amount that represents perhaps half of all the distressed debt in the market, said Lehman Brothers credit strategist Amitabh Arora. This helps moderate the risk that a struggling bank might have to auction off its investments to avoid bankruptcy, he said.

Rather than sustaining banks with badly needed loans, Dan North, chief economist at Euler Hermes, thinks the Fed is "polluting the world with dollars," meaning making money so easy to obtain that the dollar is losing value.

The market is "awash in liquidity," North said. Plenty of companies have plenty of cash to lend or spend, North said.


"The Fed is trying a multitude of things," he said. "They're looking for ways other than lowering interest rates, but what's happening is they're just pumping liquidity into the system and it's not necessarily going to make the banks want to lend more."
http://biz.yahoo.com/ap/080503/wall_main.html


A "strong dose of medicine" is just what the Gold Doctor ordered. Label it Inflation. If the Fed were really so concerned with "fighting" inflation why are they upping the ante into this growing pool of "stealth liquidity"? $600 BILLION has been dumped to date into the money supply to "avert the credit crisis" and yet credit is harder to get today than it was 60 days ago? You bet banks are hoarding this money. They have to keep this money on their books to stay solvent...their vaults are packed with worthless mortgage backed securities, and myriad other forms of credit backed bonds. Banks can't get money to loan, unless they have solid assets to back up the loans they need to conduct their "business" of loaning money. The economy is a virtual engine of debt. Our entire society is built upon a pyramid of debt. Never forget, ALL Dollars represent one thing and one thing only, DEBT. The more debt, the more worthless the Dollar. It really is that simple. And the more worthless the Dollar, the more valuable is Gold, Silver, Oil, etc.

As I put this post to bed late this evening, the Asians are AGAIN buying Gold and Silver marked down by the desperate banks in the West on Friday. The Asians hold a great deal of American debt via US Treasuries. If I were Asian, I'd be buying Gold hand over fist too. They see the US Dollar for what it is, BAD DEBT. Americans will be the last to know the truth about their money as they insist on accepting the lies of their government as truth. Only when the "Haves" become "Havenots" will the truth be known. By then truth will be very expensive. Truth is on sale for a limited time only, and it's labeled Gold.