Monday, June 7, 2010

Jobs Out Of Thin Air Go Up In Smoke

After becoming extremely agitated by the CRIMEX goons late last week, I chose to go cold turkey this weekend with respect to the economy and the Precious Metals markets after seeing the TRUTH about the phony jobs creation in the US revealed for the whole world to see Friday morning. How refreshing.

Friday's non-farm payrolls report was without a doubt the fattest lipstick painted pig that ever waddled across the World financial forum. If it wasn't so sad and alarming, it would have been highly amusing. Well, put in the context of our self anointed messianic President's expectations, Friday's jobs numbers were hysterical.

On Wednesday of last week in a highly touted speech on the economy in Pittsburgh , The Great One said he believed that the upcoming May employment report would show strong growth in U.S. payrolls.

"We expect to see strong jobs growth in Friday's report," Obama said in a speech at Carnegie Mellon University. "This economy is getting stronger by the day."

Since he is the Grand Poohba of the Washington bureaucracy that conjures up government statistics, it was a good bet that the top Waterbuffalo's expectations would be met by those who lie for him.

For an individual who claims to have studied and emulated President Abraham Lincoln we might have expected a bit more understated cheerleading from the head cheerleader. But then, he was trying hard to distract from his failed response to the catastrophe bubbling a mile below the Gulf of Mexico.

"If you once forfeit the confidence of your fellow citizens, you can never regain their respect and esteem. It is true that you may fool all of the people some of the time; you can even fool some of the people all of the time; but you can't fool all of the people all of the time."
-Abraham Lincoln

Friday morning came, and along with it the May Non-farm Payrolls Report. As the Man Of Change finished his morning coffee, he tuned in to his favorite morning worship programming found on CNBC. Our Grand Poohba was met by the ashen-faced Financial Glee Club starring back at him in dismay over the equities markets unexpected negative reaction to the wonderful payroll numbers.

Economy adds 431K jobs but few in private sector- AP
Job creation by private companies grew at the slowest pace of the year in May, even while the hiring of temporary census workers drove overall payrolls up 431,000. The unemployment rate dipped to 9.7 percent as many people gave up searching for work.


"WTF?" the Man Of Change said under his breath as his coffee cup slipped to the floor.

"These numbers are just what the economists and statisticians ordered!" the Man Of Change says through clenched teeth, his voice beginning to rise in anger.

"Jobs! The people want jobs, I give them 400,000 jobs. And this is the response I get?" the Man Of Change cries out as he turns towards the East, and falls to his knees.

What The Man Of Change failed to grasp is that these were not jobs, they were just numbers. Numbers tossed together in a "spinning" bowl with the expectations that they would come out of the oven as a big cake everyone would love to eat. Unfortunately, somebody opened the oven door before the cake was done baking...and it fell flat.

In an effort to distract the public's attention from his failed response to the oil spill in the gulf, the Man Of Change chose to slather lipstick on a ballooning pig and successfully shot himself in the other foot. The Man Of Change is quickly losing all credibility [as if he ever really had any]. One by one, week by week, Americans are waking up to "The Big Mistake" they made in the Fall of 2008. With the mid-term election now just five months away this spells big trouble for incumbent politicians in both parties come the first Tuesday in November. The Cheerleading will only get louder from here. The "spin" will soon become a vortex of lies aimed at confusing the masses, and obfuscating the TRUTH: Your Country Is Broke.

Dave Kranzler at The Golden Truth summed up Friday's non-farm payrolls report eloquently, and succinctly. I could not have said it better myself:

WHOOPS! I Thought Obama Said To Expect A Strong Employment Report
Based on today's true picture of the economy and employment, what we can expect is a massive new stimulus Bill to make its way through Congress, to be followed by an even more massive Quantitative Easing (aka printing press/helicopter drop operation) to be announced by the Fed. Obviously this will be hugely bullish for gold and silver and is probably why gold is currently up the day despite the bloodbath in the stock market.

Let's look at the facts and figures. The headline number reported that U.S. payrolls rose by 431,000 in May. BUT, 411,000 of that number was from the temporary employment of Census workers. I know someone who took a Census job and his work is finished and he can't find a private sector job to save his life.

The Government is reporting that the private sector added 41,000 jobs. Hmmm...By now everyone probably at least has heard about the nefarious Birth/Death model of jobs creation used by the BLS. This fraudulent metric is used to calculate the number jobs they THINK has been created by new businesses formed during the month less businesses that closed during the month. Interesting theory to say the least. The Birth/Death model for the month of May estimates that 215,000 net new jobs were created by new business start-ups. Anyone know of anyone who has started a new business and hired people? I don't.

Here's a sampling of the business sectors which the Govt purports to have created the most jobs based on new business formation: 78k in Leisure and Hospitality (medical marijuana shops and liquor stores?), 27k in Business and Professional Services (prostitutes maybe?), and 41k in Construction (???). Go figure. For accounting purposes, it's not accurate just to subtract the 215k birth/death jobs from the headline number to figure out the real jobs picture. But what we can say with 100% certainty is that, given the fantasy number of 215k birth/death jobs, the private sector absolutely did not create 41k payroll jobs. In fact, we can generalize that if you subtract the 411k census jobs from 431k total jobs, the private sector payroll actually declined, probably by about 100k (I will assume some new jobs actually were created by existing and new businesses). Here's a link to the Birth/Death data: Govt Fantasy.

The unemployment rate is another matter altogether. The Govt claims that the jobless rate fell to 9.7% from 9.9% the month before. BUT, the overall labor force declined by 322k. What that number represents is people who want jobs but have given up looking. If you go by the Govt "U6" report, which shows the number of people who are working part-time but want to work full-time or who stopped looking but want to work, the unemployment rate is more like 17%. If you use the method of unemployment calculation used when Clinton was President - a number that John Williams of shadowstats.com calculates, the jobless rate is more like 22%.

Two days ago Obama gave a speech at Carnegie Mellon in which he proudly proclaimed that we should expect a strong jobs report today: HUH? I didn't know Obama had any economics classes in college or grad school. But does anyone consider today's jobs report to be strong? We better HOPE and pray that Obama can CHANGE course and become the leader and reformer that he marketed himself to be during his campaign. If he's no better as a President than he is as an economist, we're screwed.

http://truthingold.blogspot.com/2010/06/whoops-i-thought-obama-said-to-expect.html

Thank you Dave. I urge everyone to read Dave's posts daily. This man has 20/20 vision.

"This shows that there's not much in the economy able to generate ongoing jobs growth, and that raises the question of the sustainability of the recovery," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.

Obama’s Optimism Puzzles Investors on Jobs Forecast
June 4 (Bloomberg) -- President Barack Obama’s upbeat comments on the U.S. job market earlier this week left investors and analysts puzzled after a government report today showed payroll growth was weaker than forecast.

“People definitely felt suckered into thinking this was going to be a good number,” said Kevin Shacknofsky, who manages $2.2 billion for Alpine Mutual Funds in Purchase, New York. “The expectations for the jobs data were driven up and the market rallied earlier in the week when the president hinted the job number would be great.”
http://www.businessweek.com/news/2010-06-04/obama-s-optimism-puzzles-investors-on-jobs-forecast-update1-.html

Obama made his jobs "prediction" on Wednesday of last week. What slipped under the radar of the Financial Glee Club too busy touting the Man Of Change's economic forecast was a speech that Bumbling Ben gave the following day in Michigan that might have shed some much needed light on the TRUTH about the jobs market.

Bernanke says job scarcity a concern
"I raise this issue here because healthy small businesses, including start-ups as well as going concerns, are crucial to creating jobs and improving employment security," he told a meeting at the Chicago Fed's Detroit branch organized to discuss the financing needs of Michigan's small businesses.

Bernanke noted that loans to small businesses dropped from nearly $700 billion in the second quarter of 2008 to about $660 billion in the first quarter of 2010. He conceded it was hard to tell exactly why.

"An important but difficult-to-answer question is how much of this reduction has been driven by weaker demand for loans from small businesses and how much by restricted credit availability," Bernanke said.

He said the Fed was still examining causes for the reduced flow of credit to businesses and it was "vital" it stay focused on discovering why it was happening and correcting the situation.

http://www.reuters.com/article/idUSTRE6523SN20100603

The Fed Chairman's astute observation here blows huge holes in the labor Departments "Birth/Death" jobs model. The government claims there were 215,000 new jobs created in May by "new business start ups". How does a recently unemployed worker create a new business without money and a line of credit from a bank?

I know I am beating this dead horse into a bloody pulp here, but the cheerleading has got to stop! The reality here in America is that nearly 20% of the work force is unemployed. All the lipstick and vanilla frosting in the world is not going to change that fact. Headlines do not create growth. Pretending that jobs are being created will ultimately be hugely counterproductive. As I noted earlier, Americans are slowly waking up to the TRUTH about their country, it's broke. The TRUTH about their country's leadership, it has none. Change IS coming to America. But it won't be pretty, and it won't be scripted on a teleprompter.

Economy Stalling as Easy Money Effect Wears Off!
by Mike Larson
The evidence is coming fast and furious — and it all points in the same direction! Washington’s “bought and paid for” economic recovery is stalling out as the easy money effect wears off.

Just consider what we’ve learned in the past several days …

• Building permits for single and multifamily homes tanked 11.5 percent in April. That left permits at a seasonally adjusted annual rate of 606,000, the lowest since last October.

Builders pull permits before they begin projects. So this leading indicator of construction activity is pointing to a renewed slump in the coming months.

• Initial jobless claims stopped declining in February. After hitting 439,000; they’ve begun a gradual upward climb again.

• Almost 4.7 million Americans are now stuck on the jobless rolls, with little prospect of finding gainful employment. That’s roughly two million above average.

• Durable goods orders outside of the volatile transportation sector fell 1 percent in April. A key indicator of business investment in the report slumped 2.4 percent.

• First-quarter Gross Domestic Product growth fell to 3 percent from 5.6 percent at the end of 2009.

• Personal spending growth? Same story. It dropped from 0.6 percent in March to nil in April.

• To top it all off, a benchmark gauge of manufacturing activity lost steam in May, while purchase mortgage applications just fell to the lowest level in more than 13 years.

http://www.moneyandmarkets.com/economy-stalling-as-easy-money-effect-wears-off-39292

Treasury Prices Soar, Post Weekly Gains As Stocks, Euro Plunge
Wall Street Journal
NEW YORK (Dow Jones)--Prices of Treasury securities rose sharply Friday and posted a weekly gain as growing worries about the global economic outlook fueled demand for safe assets.
http://online.wsj.com/article/BT-CO-20100604-711490.html?mod=WSJ_latestheadlines

Ah, the now age old flight to safety of US Treasuries. The question begs to be asked every time I see a headline touting the "safety" of US Treasuries: How can US TREASURIES be safe, when the US Government has to borrow the money to pay you back?

Bonds: Avoid the next great bubble
Over the past decade, holding bonds was considerably safer than holding stocks. After the tech bubble burst in 2000 and equities lost almost half their value over the next three years, corporate bonds surged nearly 50%. And when the global financial crisis erupted two years ago, U.S. Treasury bonds were just about the only investment to retain value. The flight to safety in recent weeks, driven by concerns over Europe's mounting budget problems, has moved investors back into treasuries for the time being yet again.

On top of that, few investors know what it's like to live through a true bear market in bonds. Fueled by falling interest rates (long-term rates were as high as 15% in the early '80s), the current bull market has lasted for 30 years.

The resulting sense of safety -- the belief that bonds don't go bad -- is contributing to this feeding frenzy in fixed-income funds and ETFs. And all that money flowing in has made bonds very expensive.

It's true that bonds are less volatile than stocks. But in fact they lose money just as often as equities do. "I don't think the public understands they can lose money in bond funds," says James Swanson, chief investment strategist at MFS, an asset-management firm in Boston.

http://money.cnn.com/2010/06/04/pf/bond_bubble.moneymag/

Yeah, and they didn't think housing prices ever go down either. The bond market bubble is the mother of all financial disasters just waiting to happen. It's not a matter of if the bond bubble bursts, but when.

Holy Cow! 5 Reasons Why You Need to Buy Gold Now!
by Sean Brodrick
Europe is having a “Holy Cow!” moment right now. That’s the kind of moment when the basic assumptions that form the “solid” cornerstones of your life suddenly crumble like soft clay.

Europe’s assumption: That the euro would last forever. WRONG! Many people wonder if the euro will exist in a few years. Heck, the euro as we know it might not last past next month!

And that’s just one of five forces that are poised to send gold hurtling higher … to $1,350 … $1,450, $2,300 and beyond. And this could happen a lot faster than most people can believe possible.

Force #1 — Britain Tells Greece: “Abandon the Euro”

Force #2 — Central Bank Buying Is Poised to Start in Earnest

Force #3 — Smart Money Is Loading Up on Gold with Both Hands

Force #4 — Supply Is Stretched to the Breaking Point

Force #5 — The U.S. Financial Crisis Is Just Starting

http://www.uncommonwisdomdaily.com/holy-cow-5-reasons-why-you-need-to-buy-gold-now-9516?FIELD9=1

50 Statistics About The U.S. Economy That Are Almost Too Crazy To Believe
Most Americans know that the U.S. economy is in bad shape, but what most Americans don't know is how truly desperate the financial situation of the United States really is. The truth is that what we are experiencing is not simply a "downturn" or a "recession". What we are witnessing is the beginning of the end for the greatest economic machine that the world has ever seen. Our greed and our debt are literally eating our economy alive. Total government, corporate and personal debt has now reached 360 percent of GDP, which is far higher than it ever reached during the Great Depression era. We have nearly totally dismantled our once colossal manufacturing base, we have shipped millions upon millions of middle class jobs overseas, we have lived far beyond our means for decades and we have created the biggest debt bubble in the history of the world. A great day of financial reckoning is fast approaching, and the vast majority of Americans are totally oblivious.

But the truth is that you cannot defy the financial laws of the universe forever. What goes up must come down. The borrower is the servant of the lender. Cutting corners always catches up with you in the end.

Sometimes it takes cold, hard numbers for many of us to fully realize the situation that we are facing.

So, the following are 50 very revealing statistics about the U.S. economy that are almost too crazy to believe....

http://endoftheamericandream.com/archives/50-statistics-about-the-u-s-economy-that-are-almost-too-crazy-to-believe

After holding firm overnight in Asia, Gold began to get pressured lower as the markets in London opened for the week. With London and new York the epicenters of the West's financial destruction, it is little wonder that the TRUTH would come under further price suppression as the wheels of their Ponzi Financial System begin to fly off at every turn. Near-term support in Gold now rests at 1210, with firmer support around 1197.

Silver is getting it's usual illegal suppression in times like these. Adding to the CRIMEX goons activity is the white metals industrial commodity ties. Though valid, these ties to Silver's industrial base are far overstated when one considers the supply issues in Silver at this time. With the entire Silver supply at the CRIMEX locked down by March and now May delivery demands, it is difficult to understand Silver's weakness based on "falling demand" for it in manufacturing. There is little or NO Silver available to meet ANY demand at this time, and the price "should" be soaring on this shortage story alone. Alas however, as the CFTC sits idely by, the CRIMEX goons continue to sell Silver they do not own into the market in the hopes of getting scared investors to dump their Silver to help meet delivery demands. This is rediculous. The goons would have far better luck getting sales from Silver investors taking profits as prices rise than they will by supressing the price...Lower prices will only INCREASE demand, and further exacerbate their supply issues on the CRIMEX.

Silver is clinging to key support here, with major support now resting near 16.50. Considering CRIMEX supply issues, and record setting sales in May of Silver Eagles at the US Mint, one would have to look at today's prices as a gift from the government. Add to your physical supply of Silver while there is still supply to draw from.

Never look a gift horse in the mouth.

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