With Puerto Rico missing a payment on a bond overnight "due to non-appropriation of funds" but denying that this constitutes anything close to a default, the territory may be about to retake the limelight as Greece is now "fixed." As Peter Schiff explains, this is far from over... As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.
For the FOMC to reach its mandate of full employment they boost stock prices which then creates employment in bubble jobs. When people feel rich, they spend more money on the low quality bubble jobs, and hence employment reacts accordingly. This is obviously entirely unsustainable as spending paid for by feelings manipulated by the FOMC accounts to nothing more than pure capital consumption, and the money flow will disappear as soon as the FOMC tighten the screw and the good feeling disappears along with the stock market gains.
The BLS continues to perpetuate the distraction officially known as the "unemployment rate" to hide the grim reality portrayed by the labor force participation rate, which shows the true decline of employment in America. The labor force participation rate of college graduates has never been lower. In the new normal, McDonald's has a lower acceptance rate than Ivy League schools. Just when you thought you had seen everything, a new story emerges: Alfred Postell has three degrees - accounting, economics, and law - but he is unemployed and homeless.
America is better off when President Obama is out on the stump bloviating and boasting rather than in Washington actively doing harm. But the whoppers he just told the students at the University of Wisconsin are beyond the pale. Said our spinmeister-in-chief: "And the unemployment rate is now down to 5.3 percent. (Applause.) Keep in mind, when I came into office it was hovering around 10 percent. All told, we’ve now seen 64 straight months of private sector job growth, which is a new record — (applause) — new record — 12.8 million new jobs all told." That’s a pack of context-free factoids.
...while the media gets overly excited about monthly job growth, the reality is that job growth has been little more than just a function of overall population growth. This isn't something the fosters long-term economic expansions that generate higher levels of prosperity... and if you think low interest rates necessitate high stock prices, that wasn't the case in the 1940s when interest rates were low and stock prices were below their long-term average relative to past earnings.
According to the BLS, in June the US added 223K payrolls, less than the expected 233K, even as the the US unemployment rate dropped to 5.3% from 5.4%. Worse, the previous number was revised from 280K to 254K. Worst of all, average hourly earnings were flat despite expectations of a 0.2%, and a big drop from last month's 0.3%.
"Racial and ethnic minorities now surpass non-Hispanic whites as the largest group of American children under 5 years old, the Census Bureau said Thursday. The demographic rise of minorities comes at a time when heightened racial tensions make headlines from St. Louis to Charleston, South Carolina, and as minorities lag in education, earnings and labor market outcomes."
Confused where all the inflation that the Fed is either unable, or simply refuses to measure, is hiding? The answer: right under your roof.
For all the drivelly, politically correct platitudes about how a great job is about emotional gratification, self-fulfillment and, of course, benefits such as a matching 401(k) and 2 weeks of paid vacation, the best job is the one where the least amount of effort generates the greatest compensation at the smallest amount of risk. In that case no job will ever match that of Coty CEO Elio Leoni Sceti, or rather non-CEO. Because whereas Sceti was scheduled to become Coty's CEO in about a week, decided not to take the job. The punchline, however, is that despite never actually having set foot in the company's Empire State Building headquarters, or even working one day for his new employer, Coty is contractually bound to pay Leoni Sceti a severance (or is that non-signing bonus) of $1.8 million... for quitting before he even started!
Whatever one wishes to believe about the veracity of BLS statistics, one thing is certain: for some US states, the ill effects of the crisis on employment still linger some seven years later.
"Over the entire period from 1978 to 2014, CEO compensation increased about 997 percent," The Economic Policy Institute notes. Meanwhile, thanks in part to a stock market rally corporate management teams helped to engineer, the CEO-to-worker comp ratio is now back near its all-time high.
The idea of an imminent US recession may seem moot as all the self-proclaimed experts and talking heads still acts as we are well into a recovery and patiently waiting for the forthcoming escape velocity which will take care of all ills plaguing today’s over-indebted society. Never do they stop to think about why things looks as dismal as they do. The sheer scale of the backwardness shown in such gross economic illiteracy suggest to us there is ulterior motives behind so-called Keynesian economic theories. Comparing GDP with cumulative goods sold and inventory accumulation since 2000 should tell you everything you need to know. The US economy is now on the verge of a new recession.
In conclusion: another month in which the Fed's trillions in reserves end up almost entirely in the stock market and NYC penthouses, with little trickling down into clothes and other "core" items, even as beef prices and asking rent hit record highs month after month.
Officially, the unemployment rate in the U.S. is 5.6%, meaning 5.6% of the work force is temporarily out of a job and actively seeking another one. But these do not feel like good times for most households, despite the low unemployment rate. By our reckoning, roughly 60% of the civilian work force is fully employed and 40% are marginally employed or unemployed.