The September jobs report was greeted by a flurry of robo-trader exuberance because another print well above 200k purportedly signals that growth is underway and profits will remain in high cotton as far as the eye can see. But how many years can this Charlie Brown and Lucy charade be taken seriously - even by the headline-stalking talking-heads who inhabit bubblevision? For the entirety of this century they have actually been gumming about little more than “born again” jobs, not real expansion of labor inputs to the faltering US economy.
One of the main causes of the hyperinflation was the decision of the Zimbabwean government to give army veterans of its recent wars a big bonus. The promise was too much for the Zimbabwean economy to manage, so the government printed money... and lots of it. Why is this relevant? Well, look at America. The chickens eventually will come home to roost for the US, just as they did for the poor Zimbabweans. The political pressure to print money is the same everywhere as are the laws of economic science.
"If you call a life of surveillance, anxiety and ceaseless toil in the service of a government you didn’t elect 'freedom', then you and I have a very different idea of what that word means." There are only two possible futures facing the United States, and neither one is pretty. Whether the collapse is gradual or gut-wrenchingly sudden, the results will be chaos, civil strife and fascism.
The U.S. government is borrowing about 8 trillion dollars a year... The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates. And our current standard of living greatly depends on the continuation of this game. If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.
Look, it's really this simple: Anything that can't go on forever, won't.
If you want to pinpoint the one dynamic pushing the global economy into not just a prolonged recession but a parallel period of massive social instability, look no farther than the social and financial stagnation that results from optimizing the system to benefit the Elites and the entrenched incumbents who protect them from competition and the dispossessed debt-serf classes below. The incestuous embrace of privilege and power by entrenched, socially isolated Elites characterizes failed states and brittle, doomed regimes throughout history.
At the heart of the problem is the fact that the Federal Reserve’s manipulation of the money supply prevents interest rates from telling the truth: How much are people really choosing to save out of income, and therefore how much of the society’s resources — land, labor, capital — are really available to support sustainable investment activities in the longer run? What is the real cost of borrowing, independent of Fed distortions of interest rates, so businessmen could make realistic and fair estimates about which investment projects might be truly profitable, without the unnecessary risk of being drawn into unsustainable bubble ventures? All that government produces from its interventions, regulations, and manipulations is false signals and bad information.
What's the opposite of government efficiency? In a double-take-instigating headline, the federal government’s Obamacare enrollment system has cost about $2.1 billion so far, according to a Bloomberg Government analysis of contracts related to the project. BGOV’s analysis shows that costs for both healthcare.gov and the broader reform effort are far greater than anything publicly discussed. However, that pales into insignificance when considering health reform has cost American taxpayers $73 billion in the last four years... and counting.
Do you have a friend who consistently borrows 30% of his income each year, is currently in debt about six times her annual income, and wanted to take advantage of short-term interest rates so that he needs to renegotiate with his banker about once every six years? Well, if Uncle Sam is your friend you do!
It’s not just homeowners who have to worry about rising interest rates, the Federal government might soon get a taste of its own medicine. From the admittedly partisan Republican Senate Committee on the Budget comes this report outlining how federal interest outlays will dovetail with other expenses in the future. "By the end of the budget window in 2024, however, CBO forecasts that interest payments will nearly quadruple to an astonishing $880 billion."
Yesterday, former Fed Chairman Alan Greenspan was the keynote speaker at KPMG’s 2014 Insurance Industry Conference Tuesday, where he answered questions such as 1) where the economy is going, 2) why, and 3) when (if ever) is it likely to improve. The answers, as reported by Property Casualty 360, are: 1) nowhere fast, 2) because nobody is willing to invest, and 3) eventually, but nobody can tell when. He listed 9 specific reasons why the "economy stinks", although surprisingly, nowhere did he mention the fact that the current and future economic disaster is all a direct result of his ruinous reign at helm of the Fed where as a result of his "great moderation" and the Fed's catastrophic monetary policies conceived mostly under Greenspan himself, the economy is now perpetually stuck in a boom-bust cycle, and where every time a bubble bursts another has to replace it or else the entire western way of life will be gone in a heartbeat.
CNBC’s long-running “jobs Friday” fetish is getting downright appalling. Each month the BLS puts out a treasure trove of data on the rich and complex mosaic of the US labor market - a download that embodies a truly frightening trend of economic failure. Yet the clowns who assemble in its screen boxes to opine on Hampton Pearson’s 30-second summary of the BLS release never have a clue. Namely, that outside of health and education there has not been one net new job created in the American economy since July 2000! Yes, not a single new jo - as in none, nein, nichts, nada, zip! The point here, however, is about economics, not social worth. And in the realm of economics, the notion implicit in “jobs Friday” - that all jobs are created equal - is simply a fatuous shibboleth.
- Scotland split jitters send sterling to 10-month low (Reuters)
- S&P 500 Beating World Most Since 1969 Doesn’t Spark Flows (BBG)
- Happy ending guaranteed: Vietnam building deterrent against China in disputed seas with submarines (Reuters)
- China Posts Record Surplus as Exports-Imports Diverge (Bloomberg)
- Russia, U.S. to hold talks on 1987 arms accord (Reuters)
- Halcon’s Wilson Drills More Debt Than Oil in Shale Bet (BBG)
- Deadly Disappointment Awaits at Ebola Clinics Due to Lack of Space (WSJ)
- Latinos furious at Obama on immigration delay, vow more pressure (Reuters)
- Japan GDP Shrinks at Fastest Pace in More Than Five Years (WSJ)
It has been an odd session: after yesterday's unexpected late day swoon despite the ECB launch of "Private QE", late night trading saw a major reversal in USDJPY trading which soared relentlessly until it rose to fresh 6 year highs, briefly printing at 105.70, a level not seen since October 2008, before giving back all gains in overnight trading. It is unclear if it was this drop, or some capital reallocation from the US into Europe, but for whatever reason while Europe has seen a stable - if fading in recent hours - risk bid, and European bonds once again rising and Irish and Italian yields both dropping to record low yield, US equity futures have slumped and are now trading at the lows of the session ahead of a US nonfarm payroll print which is expected to rise and print for the 7th consecutive time above 200K, at 230K to be precise, up from 209K in July (down from 288K in June). It is unclear if the market is in a good news is bad news mood today, but for now the algos are not taking any chances and have exited risky positions, with the ES at the low end of the range the market has been trading in for the past week centered aroun S&P 2000.