Tuesday, June 9, 2009

But just as the President's initials indicate, the plan stinks of B.O.

Temp work covers up depth of unemployment
Because of the surge of hiring for the census, April unemployment only rose to 8.9 percent — a much slower increase than had been feared. Figures out today show unemployment now stands at 9.4 percent.

But consider these numbers:

The 9.4 percent May unemployment rate is based on 14.5 million Americans out of work. But that number doesn't include discouraged workers, people who gave up looking for work after four weeks. Add those 792,000 people, and the unemployment rate is 9.8 percent.

The official rate also doesn't include "marginally attached workers," or people who have looked for work in the past year but stopped searching in the past month because of barriers to employment such as child care, poor health or lack of transportation. Add those 1.4 million people, and the unemployment rate would be 10.6 percent.

The official rate also doesn't include "involuntary part-time workers," or the 2.2 million people like Noel who took a part-time job because that's all they could get, plus those whose work hours dropped below the full-time level. Once those 9.1 million workers are added to the unemployment mix, the rate would be 16.4 percent.

All told, nearly 25 million Americans were either unemployed, underemployed or had given up looking for a job in May.

The ranks of involuntary part-timers has increased by 4.9 million in the past year, according to a May study by the Federal Reserve Bank of Cleveland. Many economists now predict unemployment won't peak until 2010. And since employers generally increase the hours of existing workers before hiring new ones, workers could be looking for full-time jobs for some time.


1Q credit card delinquency rate jumps 11 percent

Obama confronts doubts on stimulus, vows faster spending
Results of the stimulus spending are difficult to measure, and so far the promised federal money has been slow in coming. As of May 29, just over 100 days since Obama signed the bill into law, only about 6% of the funds had been spent.

And on the jobs front, an early target was missed: Two of the president's top economic advisors put out a report Jan. 9 predicting that with the stimulus spending, the U.S. unemployment rate this year would not exceed 8%. It now stands at 9.4%. That figure is higher than Christina Romer and Jared Bernstein had said it would be even if the stimulus package had not been adopted."

A lot of this is hokum. All along, [Obama's] job numbers have kept changing according to the political environment," said Peter Morici, a professor of international business at the University of Maryland.

Kevin Hassett, director of economic policy studies at the American Enterprise Institute, a conservative-leaning think tank in Washington, put it even more bluntly: "The actual unemployment rate is worse than their baseline -- suggesting that their stimulus plan was harmful. And yet, despite that, they're asserting it has been successful. That shows an incredible amount of gall."


Media Skeptical Of Obama Stimulus Claims
President Obama's comments Monday in support of his economic stimulus package generated largely skeptical coverage from the news media, which cast doubt on the new White House forecasts and cast the President as facing growing political dangers on economic and fiscal issues. The CBS Evening News, which led with the story, was the only network newscast to mention the President's remarks: "It's been nearly four months since...Obama signed that $787 billion stimulus into law," said CBS, and "the economy is continuing to hemorrhage jobs." The AP says that Obama was "scrambling" yesterday to calm Americans unnerved by unemployment rates still persistently rising nearly four months after he signed the biggest economic stimulus in history." The Washington Post says that "the list of spending plans detailed...amounted to little more than a restatement of plans already underway for the coming months, without any explanation of what steps, if any, the White House would take to accelerate the pace of spending." The Wall Street Journal also reports that "the White House offered no new details Monday on how it would speed up spending from the $787 billion stimulus package, and in many ways the administration is limited by the gradual pace set out in the law passed earlier this year."

The AP reports, "For the first time, the administration admitted the economic forecasts it used to sell the stimulus were overly optimistic." Vice President Joe Biden's "top economic adviser," Jared Bernstein, said, "At the time, our forecast seemed reasonable." The Politico notes that "Republicans say the 'save or create' metric for jobs is meaningless, since it's impossible to prove or disprove." The Washington Post reports that the Administration's "push to spin the package was accompanied by a classic...misstatement" by Vice President Biden, who said "that a big chunk of the money was geared toward 'make-work projects.'"

The Los Angeles Times reports that Obama "billed" the stimulus "as an adrenaline jolt," but the economy is "still sputtering." More positive is the report in the New York Times, which describes Obama as a President "now in the position of trying to convince Americans that...his signature legislative achievement thus far...is working, even as the job losses mount." Also positive is the report on AFP, which says "the 10 new projects announced included improvements on 98 airports and over 1,500 highways, federal funding for 135,000 education jobs and maintenance work at 359 military bases and other facilities."


U.S. Third-Quarter Hiring Plans at Record Low, Manpower Says
June 9 (Bloomberg) -- U.S. employers’ hiring plans for the third quarter held at a record low, signaling fired workers will have to wait many more months to find a job, a survey showed.

Manpower Inc., the world’s second-largest provider of temporary workers, said its employment gauge for July through September was minus 2 after adjusting for seasonal variations, matching the second quarter’s reading as the lowest since data began in 1989.

Companies are “treading slowly and watching with guarded optimism, hoping a few quarters of stability will be the precursor to the recovery,” Jonas Prising, president of the Americas for Milwaukee-based Manpower, said in a statement.

The report underscores forecasts that unemployment will keep climbing even as firings subside. The Labor Department reported last week that the U.S. lost 345,000 jobs in May, the fewest in eight months, while the jobless rate surged to the highest level in almost 26 years.

Sixty-seven percent of employers surveyed said they anticipated no change in hiring next quarter, the same as the prior two periods, Manpower said.

The auction today of $35 billion of three-year notes is the first of three sales by the U.S. Treasury this week.

The market will absorb more Treasury sales of coupon securities this week with $19 billion in 10-year notes on Wednesday and $11 billion in 30-year bonds on Thursday.

The flood of new debt has some investors fretting over the possibility of rising inflation in the longer term as government deficits grow, putting upward pressure on yields of longer maturities.

The Charm Offensive
By Peter Schiff
Last week Team Obama took their dog and pony show on the road. Treasury Secretary Geithner went to China, Fed Chairman Bernanke to Capitol Hill, and the President himself began a Mideast tour in Saudi Arabia. This full-court press is not coincidental, and comes just as the federal government has begun unloading trillions of dollars in new Treasury obligations. The coordinated charm offensive is meant to assure the world-at-large that the United States can repay these obligations without destroying the dollar.

Given the renewed weakness in the dollar and the recent expressions of concern from China, our largest creditor, about the safety of its current holdings, this is no easy sell. Not only must our leaders convince holders of our debt not to sell what they already own, but to back up the truck and buy a whole lot more. The hope is that a dream team consisting of a charismatic politician, a skilled Wall Street banker with longstanding ties to China, and a respected Fed Chairman, can close the deal. However, no matter how slick the sales pitch, no amount of lipstick can dress up this pig.

The most obvious fear the trio must address is that oversized deficits will persist indefinitely. Reading from a carefully scripted rebuttal book, all three proclaim that as soon as the stimulus revives our economy, the government will take all necessary steps to reign in the deficits that result. Bernanke's testimony showcases this rhetorical shift. The Fed Chairman claimed that catastrophe has been averted and that the recession is nearly over. As a result, he advised Congress to now focus on debt management. How he expects them to do that was left unexamined.

Setting aside the fact that the recession is far from over and that the stimulus will actually weaken the economy in the long run, Bernanke's words were less a practical guide to Congress than a bromide for our foreign creditors. Meanwhile, Obama carefully peppers his speeches with calls for Americans to live within their means, to save more and spend less, to produce more and consume less. But nothing in the government's current fiscal or monetary policy will encourage such behavior. In fact, the objective of economic stimulus is to prevent such changes from taking place!

The laughter of Chinese students that greeted Secretary Geithner at Peking University shows how ridiculous this spiel sounds overseas. Actions speak louder than words, and the actions of the current Administration are deafening. Multi-trillion dollar deficits, bailouts, nationalizations, quantitative easing, and grandiose plans for government-provided healthcare, education, and alternative energy, render all their claims of future prudence meaningless. If our leaders will not make tough choices now, why should anyone believe they will do so later when those choices will be even harder to make?

The Plummeting Dollar Prosperity Plan
By Michael Pento
It is becoming painfully obvious that the Fed, Treasury, and Administration's disastrous recovery plan hinges on the devaluation of the U.S. dollar. Their specious strategy stems from the belief that a falling currency can re-ignite exports and spark a recovery in manufacturing while putting a floor in U.S. asset prices. But just as the President's initials indicate, the plan stinks of B.O.

If all a country needed to do to achieve manufacturing supremacy and economic dominance was devalue their currency then Georgia and Bosnia would be considered paragons of economic prosperity. That's because a country's economic health, productive output and balance of payments has less to do with the value of the currency and more to do with tax rates, union influence and environmental legislation.

As long as we continue to substitute spurious growth models for genuine growth policies we will continue to lose global power and influence. The only part of the current plan that is sure to work is the cessation of falling asset prices. Unfortunately for us, that will come at the risk of creating intractable inflation and putting our foreign creditors on notice that we will destroy not only the value of their U.S. dollar holdings but the very value of the currency in which they are denominated. Who does Mr. Geithner think he’s kidding? The Chinese have already moved to purchase short dated Treasuries so as to allow them an easy escape. They may also dramatically curtail their purchases. For a country that needs to issue nearly $3.25 trillion dollars of debt this year alone and trillions of dollars for many years to come, that is disastrous for this debt-laden economy.

The Biggest Victim of the Debt Crisis
by Martin D. Weiss, Ph.D.
It’s widely known that America’s federal deficit is out of control.

But so many dire deficit warnings have been issued so often, they now fall mostly on deaf ears. Wall Street pundits roll their eyes. Washington politicians laugh at those who would cry “wolf.”

What they don’t realize is that this time, due to a series of devastating facts they’ve chosen to ignore, the day of reckoning is here:

Fact #1. Sheer size. According to the government’s official estimate, the federal deficit for fiscal year 2009 will be $1.84 trillion, or 13.4 percent of GDP!*

It is the worst deficit in U.S. history.

Fact #2. The actual deficit could be much larger. The administration’s $1.84 trillion deficit forecast presupposes a dramatic turnaround in the economy, which, by definition, is virtually impossible with the government running trillion-dollar deficits!

Fact #3. No end in sight. Since the United States declared its independence nearly 233 years ago, the only time the federal deficit approached or exceeded 10 percent of GDP was during major wars — the Civil War, World War I, and World War II. But in each case, the deficit financing began promptly — and ended promptly — with the war.

Fact #4. Today’s deficits are far worse than those of the Great Depression. America’s first big, multi-year peacetime deficits came in the 1930s. Tax revenues plunged with the sinking economy. And in the years that ensued, government expenditures — mostly for a series of programs to bail out the economy — went through the roof.

But even with a 90 percent collapse in the stock market in 1929-32 and even after three years of double-digit GDP declines that make today’s look mild by comparison, the federal deficit in 1933 was just 3.27 percent of GDP, less than one-fourth of what’s projected for this year.

And subsequently, even when the U.S. government embarked on the most ambitious stimulus and bailout programs of its 150-year history, the biggest single deficit — in 1936 — was 4.76 percent of GDP, only about one-third the size of today’s.

Fact #5. Structural deficits. Our nation’s second encounter with giant peacetime deficits was in the 1980s, but with a big difference: This time, there was no Great Depression. This time, the government’s fiscal woes were mostly structural — deeply ingrained in the bloated size of government and in our society’s dependence on government for much of its sustenance.

And even then, the federal deficit never rose to more than 5.63 percent of GDP, less than HALF its size today.

Fact #6. Massive new commitments. Beyond the $1.84 trillion of red ink projected for 2009 and beyond the trillions more in future obligations, the U.S. government has just assumed responsibility for nearly $14 trillion in new loans, commitments, and guarantees to bail out brokers, banks, insurers, auto makers, and the broader economy.

Why the Federal Reserve Can’t
Stop Treasury Bonds from Falling

I can assure you, it’s not for lack of trying.

In a massive attempt to boost Treasury bond prices launched March 25, the Fed has now bought $145.5 billion in Treasury notes and bonds, the most ever in such a short period of time. But despite all the Fed’s buying, T-bond prices have continued to plunge and interest rates have continued to surge.

Plus, in an even larger effort to support mortgage prices — and to suppress mortgage rates — the Fed has poured a whopping $507 billion into direct purchases of mortgage-backed securities (MBSs). But again, even after spending more than a half trillion dollars to bid them up, mortgage prices have still collapsed and rates have still surged.

In sum, the U.S. Federal Reserve has failed to stop this new phase of the crisis, and one of the key reasons is obvious:

To buy bonds, the Fed must print money. But the more it prints, the more it fans inflation fears and the more it chases away bond investors, who realize they’ll be paid back in cheaper dollars.

Some pundits seem to think the Fed can simply print all the money it wants to finance the massive deficits. But in the real world, it doesn’t work that way.


Will a 'Silver Bullet' Finally Kill the Metal Manipulators?
Many commentators have pointed to the rigged Comex markets in New York as the place where the final destruction of the Manipulators will occur. However, with the short positions of the bullion-banks, and their (supposed) “custodial agreements” with the bullion-ETFs being “two sides of the same coin”, then implosion could originate in either component of this fraudulent manipulation.

A bullion-default at the Comex (or “Crimex”, as some like to call it) is a very simple scenario. The Comex is essentially selling its phony, “paper” futures for less than any other bullion market. Thus, at some point, large buyers will simply step into this market and continue relentless, heavy buying until default occurs.

Specifically, there would be a “failure to deliver” of bullion to a buyer (or buyers) - who chose to hold their futures contract until expiry, and thus take “physical” delivery of real bullion. As has been reported by several commentators, apparently such a default nearly occurred just weeks ago (see “Did ECB save Deutsche Bank from Comex gold-default?”).

There has been a great deal of frustration among the “gold bugs” (in particular) that such a final “show-down” has not already taken place. However, perhaps we would all be more patient in this respect if we were to try to put ourselves in the position of such big “players”.

Looking at silver, based on fundamentals, it is totally obvious that silver is headed for a spectacular explosion in its price. At a time of record demand for gold and silver, there are lower inventories of silver (relative to gold and in absolute terms) than at any time in centuries. Simultaneously, the gold/silver price ratio is more unfavorable for silver than at nearly any time in history, currently over 60:1. The long-term price ratio (over thousands of years) is 15:1. Additionally, as “elements” in the Earth's crust, silver is only 17 times as plentiful as gold. Thus, a 60:1 ratio is not remotely sustainable, even over the medium term.

Therefore, armed with the knowledge that investing in silver will yield a huge windfall for all long-term investors, do you (as a large “player” in the silver market) force the inevitable implosion now (and “kill” the proverbial “goose that lays the silver eggs”) - or, do you patiently use the Manipulators game against them: buying as much grossly undervalued silver as you can from these criminals, before their inevitable self-destruction?


No comments:

Post a Comment