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The Fed in a Vice: an Ugly Jobs Report, Romney, & Obama

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Wolf Richter    www.testosteronepit.com

The ugly jobs report gave Mitt Romney’s campaign what it had been waiting for: a huge boost. And they’re out making hay. Romney called it "devastating news for American workers and American families.” An army of Republican talking heads swarmed over the land and pummeled President Obama with the jobs report. And just as Republicans see victory edge closer, shrill voices are now calling for the Fed to launch the next round of quantitative easing.

On Thursday, Romney, in California to rake in the big bucks with a series of high-dollar fundraisers, took some time out for a news conference in Fremont, in front of a weedy property dominated by a shuttered office building. Parched hills in the background. “Solyndra” a sign said. The company isn’t famous for its special thin-film solar cells that proved to be uncompetitive, but for the scandal surrounding the $535 million in federal loan guarantees it had received as part of the stimulus package. It was one of the ballyhooed "green tech" outfits that were going to revolutionize the American industrial scene, create gazillions of "green jobs," and conquer the world.

“A symbol of a serious conflict of interest," Romney called it as he recapped the sordid affair, one of the worst debacles, though not the only one, of the stimulus bonanza, which, if I recall correctly, had been a bipartisan concoction. When Solyndra went bankrupt, taxpayers had to pay off the loans that the government had guaranteed. The promised green jobs remained elusive.

And there certainly weren’t any signs of them in the jobs report (BLS PDF). Instead of the 165,000 jobs that the Wall Street hype machine had proffered, a mere 69,000 jobs were created in May—corroborating recent data of a wobbly economy. And worse: the April number was whacked down from the original and already disappointing 115,000 to 77,000 and the March number was trimmed from 154,000 to 143,000. The recent trend looks awful:

 

 

The headline unemployment rate ticked up a notch to 8.2%, and U-6, the broadest measure that includes the underemployed and those marginally attached to the labor force, ticked up three notches to 14.8%. While the Employment-Population Ratio improved a smidgen to 58.6%, it depicts better than anything else the tragedy of the American employment scene.

 

 

After World War II until 1975, the Employment-Population Ratio bounced between 55% and 58%. As women entered the workforce in greater numbers, it edged up; and after the recession of 1983, it went on a bull run that peaked in April 2000 at 64.7%. Then it declined. Whatever the reason. Outsourcing, innovation, off-shoring, tax laws, technological progress, corporate shortsightedness, cheaper labor elsewhere. When the housing and construction bubble took off in 2004, it recovered a bit, but in 2006, it all fell apart. Since the jobs crash of the Great Recession, the ratio has remained close to the lows last seen in 1984.

And this, despite years of gyrations by the Fed as it printed trillions of dollars and inflicted its zero-interest-rate policy on savers, bondholders, and pension funds, thus creating an era of financial repression where investing in relatively safe instruments produces a guaranteed loss after inflation. These policies have led to capital misallocation and outright capital destruction: for one of the fiascos that these policies abetted—capital destruction on a massive scale—and that is now brutally coming to a head, read.... The Natural Gas Massacre Gets Bloodier.

The policies have also created epic bubbles in bonds and commodities, plenty of inflation for the middle class, and an enormous amount of wealth for those who benefitted from them ... but alas, they haven’t created a lot of jobs.

As Romney is trying to use the deteriorating jobs picture as a crowbar to dislodge Obama from the Oval Office, an opposing effort is gaining momentum: getting the Fed to open up the spigot and flood Wall Street with money. On Thursday, Boston Fed President Eric Rosengren spelled out the Fed’s options, from extending Operation Twist to purchasing mortgaged backed securities. So the yield on the 10-year Treasury note plunged to 1.46%, unthinkably low not long ago. Japan comes to mind. But QE3, even in modest form, would be perceived as helping Obama cling to his job. And this would put the Fed on collision course with every Republican.

Interesting times. And now, to top it off, the strongest and toughest creature out there, and maybe the smartest one, that no one has been able to subdue yet.... The Inexplicable American Consumer Has Hit a Wall.

And here is a hilarious, sharp-tongued, but good-natured cartoon by Ben Garrison: “Romney, Taking a Stand on the Issues.” Precious!

 

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Sun, 06/03/2012 - 08:45 | 2488839 Burticus
Burticus's picture

Turn off reruns of the elephant & jackass show.  Accept that there is one ruling party in 'murka, represented by elephant & jackass sock puppets, with the same central bankers' hands are in both.

The Bushbama regime has been a seamless continuum of destruction.  Accept that the 'con party leadership is perfectly comfortable with the Kenyan Usurper.  What's there not to like - massive deficits, exponentially increasing debt, generous bankster handouts, perpetual undeclared war, evolving totalitarian surveillance police state, etc.?

An Obamney regime will make sure NOTHING CHANGES.  Any vote for the ruling elephantjackass party is a wasted, sucker's vote.  Of course, as long as votes are "counted" in secret by computer, the ruling party has the same insurance policy as Stalin.  Read the first few paragraphs of the Declaration of Independence for our framers' advice on what to do.

Sun, 06/03/2012 - 09:35 | 2488869 HowardBeale
HowardBeale's picture

Agree. And I would like to add: The "1%" fielded (funded) a group of absurd clowns--and a knowingly unacceptable Wall Street Whore, Romney--so that they could insure Obama's place and their continued protection against prosecution. 

 

And Obama and Holder haven't gone after anyone legally because...? It ain't just money. There a mightly pile of dirt hiding under that pile of shit Obama has heaped on the People, while calling it hope and change. Just how fucking dirty are Obama and Holder--and the gang of 535...

Sun, 06/03/2012 - 08:03 | 2488815 Hedgetard55
Hedgetard55's picture

I WISH Ben's balls were in a vise, not a vice.

Sun, 06/03/2012 - 03:28 | 2488646 vainamoinen
vainamoinen's picture

Romney's the next president.

Obama was put in place by the banksters to take the hit if and when necessary.

It appears that a big throttle back needs to go down now to for the oligarchs to maintain the status quo - so Obama has to take a bullet (metaphorically speaking). It just goes with the job.

Personally, I don't care who is president but I won't be happy until Michelle is working the coffee counter at her local grocery store when she's 75. Payback for when she was disbarred in Illinois in the early 90's and the whole thing was repressed so the Barback could put the "smiley face" on the banksters crimes.

With any luck "What goes around comes around" will finally hit home.

Sun, 06/03/2012 - 06:49 | 2488756 AurorusBorealus
AurorusBorealus's picture

You are exactly correct.  The same powers that elected Obama will throw him under the bus: The universities will be upset, but the bankers and military-industrial complex are going to make him the fall-guy for the failure of currency debasment (after they debase the currency some more).

Sun, 06/03/2012 - 12:10 | 2489184 Burticus
Burticus's picture

It is also possible that Mitt Zombie is the stooge selected by TPTB to be next "paid loser" to the Kenyan Usurper, like McSame in 2008.

Either way, under a Obamney regime, nothing changes, status quo perpetuated.

Sat, 06/02/2012 - 22:44 | 2488294 zorba THE GREEK
zorba THE GREEK's picture

Obama is a devisive president, pitting one group against another in order to get the upper hand.

What the U.S.A. needs now is a president who can serve all people and unite them in a common cause. 

Someone once said: "Every country has the government it deserves." AMERICANS need to wake up and demand 

a government of the people, by the people, and for the people, before it's too late.

Sun, 06/03/2012 - 09:21 | 2488861 Are you kidding
Are you kidding's picture

They just HAD their chance...again...and they blew it by not picking RP in the primary. They had a chance with Perot, Buchanan, and even Nader...or, ANY of the libertarian candidates. They keep doing what they're told...that is their problem.

Sat, 06/02/2012 - 22:29 | 2488262 andrewp111
andrewp111's picture

So what if the Fed is "on a collision course with every Republican".  Romney (and all Republicans) have PROMISED not to reappoint Bernanke under any circumstances whatsoever.  Bernanke has nothing to lose by going pedal to the metal, balls to the wall, to reelect Obama. He might as well appear in a joint news conference with Obama and proclaim the Reelection Refinance Plan, which will allow all mortgage debtors to refinance at 0% in the first 6 months of Obama's second term, regardless of LTV or any other consideration. While they are at it they should forgive all student debt as well - on Jan 21 2013. The Fed needs to drop all pretense of being non-political, and do what it takes to keep Bernanke in power by reelecting Obama.

Sat, 06/02/2012 - 22:42 | 2488292 Uchtdorf
Uchtdorf's picture

Even if Romney wins and Bernanke doesn't get the nod, there are dozens, nay, hundreds of men we've never heard of that the elites could recommend for the ChairSatan position. We're toast one way or the other.

Since Americans have forgotten the cost of their liberty, they will have to pay for it again.

Sat, 06/02/2012 - 22:37 | 2488283 XitSam
XitSam's picture

I don't believe a single word that comes out of Romney's mouth. http://www.testosteronepit.com/storage/romney_toon.jpg

He'd probably come out with some shit about how it would be "disruptive" to change Fed chairsatans when the economy is at such a delicate point.

Sat, 06/02/2012 - 18:52 | 2487920 SKY85hawk
SKY85hawk's picture

Do you remember the stock market between 1966 and 1981?

Down, Down and Downnnn.  Stagflation, etc.

The Bob Hope generation had started their deleveraging towards retirement.

In 2007 the Baby Boom generation began deleveraging for retirement.

No politician will admit they understand this because they are helpless to improve things.  They will wait out the slow years to come.  But, will they reduce government spending ?

I am afraid not. But, whoever is president in 2013 will have to solemly announce that WE'VE GOT SOME BIG PROBLEMS THAT MUST BE DEALT WITH NOW.

Anyone with half a brain can see the value to converting 401-k and IRA money into a Roth-IRA.  Those of you without jobs can convert significant amounts that will not cost more in taxes because of your deductible levels.

Don't just sit there and let 'em take your money, THINK!

 

Sat, 06/02/2012 - 23:05 | 2488341 Miffed Microbio...
Miffed Microbiologist's picture

Hmmm, what if you don't qualify for a Roth IRA? I converted 37,000 IRA into a gold IRA (picked the coins out and watch the armored truck drive away and prayed). who knows if I'll ever see it again but it certainly was no more secure where it was. I have come to the conclusion in these times that it's better not to hold all your retirement investments in easily tracked instruments. The bulk of our retirement currently is held in a 401k and a 403b of which we haven't contributed to in 3 years. I have not got the courage yet to cash out as some here have. Hopefully when the times come it won't be too late. Our main focus now is survival prepping and hope when the SHTF it won't be beyond what is humanely possible to prepare.

Miffed:-)

Sun, 06/03/2012 - 00:16 | 2488456 CharlieSDT
CharlieSDT's picture

I've been taking money out of my IRAs, penalty be damned and buying gold.  Hasn't everbody?

 

http://www.singledudetravel.com/2011/09/charlies-first-ira/

Sat, 06/02/2012 - 18:33 | 2487891 mjk0259
mjk0259's picture

I wonder is that employment chart including part time workers that want to work full time? Probably not since unemployment does not count them.

Sat, 06/02/2012 - 17:44 | 2487824 Salt
Salt's picture

How does one spell "poser"? Why, Obama.

Sat, 06/02/2012 - 17:30 | 2487804 world_debt_slave
world_debt_slave's picture

Ron Paul is the only presidential candidate that will have the will to correct this thing.

Sat, 06/02/2012 - 22:27 | 2488257 otto skorzeny
otto skorzeny's picture

israel/AIPAC/WStreet/Hollywood (do you see a pattern?)would never allow RP to be president

Sat, 06/02/2012 - 22:31 | 2488271 XitSam
Sun, 06/03/2012 - 05:39 | 2488714 Zero Govt
Zero Govt's picture

there's no hope for anyone through the political process, it's rigged from start to finish

the only action you can take is individual, by stop paying taxes, the ultimate 'vote' agasinst what's going on in Washington

i sound like a broken record on this but Tax Revolts are the most effective short of revolution which more often than not ends up in worse hands than previous

Sat, 06/02/2012 - 17:37 | 2487818 Zero Govt
Zero Govt's picture

Bumma has no power, nor would RP

See how the system has seized up now.. the only stuff getting passed is what the Senate, Congress and President all agree on: more war, more taxes and more oppressive laws of State over citizen

Sat, 06/02/2012 - 18:16 | 2487865 world_debt_slave
world_debt_slave's picture

thanks for post, imho, I believe RP could start getting the ball rolling and use his bully pulpit to work for change.

Sun, 06/03/2012 - 00:13 | 2488452 CharlieSDT
CharlieSDT's picture

The bully pulpit idea is questionable as RP does not speak in a way that the American Idol crowd can understand, but a easy way for him to change a lot as president would be to veto every bloated spending bill and pardon every noviolent drug offender, as he has promised.  Too bad he has no chance.  I'm voting for him anyway.

Sat, 06/02/2012 - 23:16 | 2488370 Miffed Microbio...
Miffed Microbiologist's picture

Agree with you and am planning to write in RP. However I do have some reservations. I really think he will be killed if he actually does start to effectuate changes if he were elected. Frankly an assassinated RP for me is worse than him not being elected. Even if his death meant the sheeple finally wake up to the horrors our country has become. That would be the final blow and with out even a modicum of hope for the future would be truly depressing.

Miffed:-)

Sat, 06/02/2012 - 17:30 | 2487803 monad
monad's picture

#1 contributor to Romney is GS. Something to say about a conflict of interest there, pro-war draft dodger Romney?

RON PAUL 2012

Sun, 06/03/2012 - 06:50 | 2488755 scatterbrains
scatterbrains's picture

I noticed that and find it hard to believe that the bankster crooks would make it known publicly that they are backing Mittens while the current president has the power to send them all to jail.  Makes me wonder how much they are paying oblahblah to keep his mouth shut and not look their way.. Oblahblah deserves 10 times as much money what with the power he holds..  but maybe he's just a scared pussy..certainly doesn't seem like leadership material that's for shit sure.

Sat, 06/02/2012 - 16:24 | 2487691 Sudden Debt
Sudden Debt's picture

Obama is the 4 th best president EVER!!!

http://www.youtube.com/watch?v=TxvSjDkF7HE&sns=em

At least he says so himselfs....

Sat, 06/02/2012 - 20:59 | 2488078 stocktivity
stocktivity's picture

....maybe of the last 4

Sat, 06/02/2012 - 17:53 | 2487834 eatthebanksters
eatthebanksters's picture

hisself...

Sat, 06/02/2012 - 18:37 | 2487900 q99x2
q99x2's picture

Barry Soetoro's Kenyan self.

Sat, 06/02/2012 - 23:31 | 2488397 Joseph Jones
Joseph Jones's picture

I forgot, is it POTUS, or POS?

Sat, 06/02/2012 - 16:59 | 2487749 Zero Govt
Zero Govt's picture

4th Best out of the last 4 Presidents

bottom of the class then, tut, lefties

Sat, 06/02/2012 - 22:29 | 2488266 XitSam
XitSam's picture

4th best term of Obama's 4 terms. The remaining ones will be better after he deals with the opposition ... like his buddy Chavez is doing in Venezuela

Remember, DHS ordered 450,000,000 rounds of .40 caliber. At 10 rounds for each terrorist, that's ... 45 million terrorists they must be expecting to kill.

Sat, 06/02/2012 - 16:06 | 2487662 Treason Season
Treason Season's picture

Romneyobambi.

Oramabomney.

Who gives a fucking shit?

Sat, 06/02/2012 - 21:00 | 2488080 Overfed
Overfed's picture

Robomney. :-)

Sat, 06/02/2012 - 16:01 | 2487651 balz
balz's picture

It's not "whatever the reason". It's PEAK OIL. Simply.

Sat, 06/02/2012 - 17:01 | 2487754 BeetleBailey
BeetleBailey's picture

I disagree. Peak oil? Hardly....

"Outsourcing, innovation, off-shoring, tax laws, technological progress, corporate shortsightedness, cheaper labor elsewhere."

All of the above, combined with the asinine self-denial of oil (the US) on top of paying WAY too much attention to the Middle East - plus feeding the fucking war machine shit-eating MIC.

 

Sat, 06/02/2012 - 16:40 | 2487715 malikai
malikai's picture

It's not that simple. PO contributes, but is nowhere near the sole reason.

Sat, 06/02/2012 - 15:58 | 2487645 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

As 1 Eisenhower era vet once told me when talking about Presidents, "Never let a fellow lead U into war that's never been in a war".

Sun, 06/03/2012 - 01:58 | 2488565 jeff montanye
jeff montanye's picture

clinton did ok in serbia and ike, kennedy and johnson (all combat vets with medals) not so much in vietnam.  sounds good but isn't true, imo.

Sat, 06/02/2012 - 15:56 | 2487641 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Good.  May the vice choke it to death.

Sat, 06/02/2012 - 15:52 | 2487630 M.B. Drapier
M.B. Drapier's picture

It's odd how we hear so very much more about Solyndra than about the last administration's efforts with cellulosic-ethanol startups.

Sun, 06/03/2012 - 01:24 | 2488519 JeffB
JeffB's picture

Mr. Richter did note in his article that he recalled it as a bipartisan project:

"one of the worst debacles, though not the only one, of the stimulus bonanza, which, if I recall correctly, had been a bipartisan concoction."

Both parties have boondoggles and spend taxpayer money like drunken sailors, but from my standpoint, Obama has been the worst of the worst. But it really doesn't matter to me with respect to who I support. Obama is so horrible on so many fronts that it's a little ridiculous to argue about one little idiot escapade of stupidity. He would never come close to getting my vote even if Solyndra had been a big success story.

Ron Paul is the only candidate who really deserves our support. It's too bad enough of the electorate can't see beyond the mainstream media spin about "how crazy he is".

I think a lot more people will wake up, but it looks like they may need a catastrophe of unprecedented proportions to do so.

I wonder if it'll happen before the election. Even if it does, will it be too late?

Of course, even electing Ron Paul might not eliminate horrible problems, but he could at least mitigate them and shorten their duration, getting us on the path to cutting out the cancer and setting the stage for a healthy recovery down the road.

 

Sat, 06/02/2012 - 19:55 | 2487991 nmewn
nmewn's picture

Solyndra is just the most well known.

I remember Chu shoveling hundred of millions out the back door as the last day deadline approached, lest it go unspent.

My personal favorite is the aptly named Fisker Karma.

Another muti-million dollar government knows best greenie boondoggle. With the Karma (if you can even afford to shell out the $103,000 per copy) it's very possible you'll be in a cab following the tow truck back to the dealer...

http://www.consumerreports.org/cro/video-hub/featured/featured-videos/100000-fisker-karma-breaks-down/17387256001/1496201987001/

which would be a stroke of luck in the long run. Otherwise it might start and you'll tool around town looking suave & sophisticated to friends & family, go back home, park it in your garage, go inside to make a sushi sandwich and have instant Karma...lol...start your house on fire...

http://content.usatoday.com/communities/driveon/post/2012/05/fisker-defends-karma-blamed-for-setting-house-on-fire-/1

Sat, 06/02/2012 - 15:51 | 2487622 dizzyfingers
dizzyfingers's picture

Though not 100% of what's going on is Obama's fault, do you really think he requires levering out of office, considering how disrespectful, self-aggrandizing, tin-eared, and by the way disrespectful he is?

An email I just received:

Obama on Memorial Day 2012

The following was from a veteran who was at the Vietnam Memorial yesterday:

I am currently in Washington DC and witnessed the following. I saw this first hand and I bet you won’t hear about this from the Liberal media…

Vietnam veterans and the families of Vietnam veterans killed in action whose names are etched on the Wall were denied access to their memorial today, of all days, Memorial Day. The Vietnam Memorial was shutdown, cleared and secured for approximately 5 hours prior to Obama, his cronies and hand picked veterans for a 15-minute appearance by Obama. It’s obvious it was all for show. After all, this is an election year.

Hundreds if not thousands of Vietnam veterans and families of Vietnam veterans killed in Vietnam stood in disbelief as Secret Service, Park Police, Washington DC Police, etc., blocked all access to the Vietnam Memorial and kept everyone approximately 100 yards away from their memorial for the first time in the history of the Memorial so Obama could get some photos of him at the Wall. Veterans in uniforms stood in the heat angered as Obama makes them wait. It was a photo op at their expense and families of those killed in Vietnam.

As I stated, I was there and witnessed all of this. Many veterans and others flipped Obama the finger as his motorcade drove past. I didn’t honor him with a finger salute because I was busy holding up my 3?x5? Don’t Tread on Me Flag as his motorcade drove past.

-----------------------------------------------------------------------------------

And, another:

“Today is Memorial Day and I went to the Vietnam Memorial and something happened there that upset me greatly and I want to pass it on.

For over 15 years I had been going with my dear Marine buddy, Larry Cullen. Since he passed away last year and was interned at Arlington Cemetery, I went this year accompanied by my grandson, Cameron. I had my list of Recon Marines, school classmates, and Larry’s fallen buddies to visit but, as we got close to the area of the National Mall where the Wall is located, we saw huge white tents. We also saw barricades all along Constitution Ave and for a couple blocks in each direction from the Wall. They even closed down all of Constitution Av from the Lincoln Memorial all the way to the WW-II Memorial and there was a virtual army of uniformed and plain-clothes security everywhere.

The biggest tent was right at the west end of the Wall entrance and there was a covered walkway leading right up to The Wall. It was so close, you couldn’t get to the Wall on that side so, my grandson and I went all the way around to the eastern entrance to the Wall and walked down along the Wall to the first of my names and I began telling my grandson about my buddies and how each one died. In short order, a guy in a dark suit and earpiece in his ear told us we had to leave as it was 0730 and they were closing Memorial until at least 1400 so the President could drop by. I asked if he was serious and he assured me he was. We and all the other veterans and families were forced to leave and it was locked down.

The Vietnam Memorial is the most visited site on the entire National Mall. Memorial Day has more visitors to the Vietnam Memorial than almost any other day. Even at the rather early hour Cameron and I were there, there were a lot of veterans and family members down there. In the midst of all that, Obama decides to close it for over seven hours just so he can roll by for 30 minutes in the afternoon for a campaign appearance with Democrats, supporters, and campaign donors? This is an incredulously arrogant, egotistical, and inconsiderate thing to do. What in hell was Obama thinking?

Hey President Obama: Since you ran me (and all the other veterans and family members) out of the Memorial before we finished our business there, how about doing me a favor. If you can take a short break from all the grippin’, grinnin’, posin’ and pontificatin’, how about taking a minute or two to stop by and say hello to my fellow Recon Marines and other classmates on the Wall. I suspect you’ll be too busy with photo ops, campaigning, and stroking donors to be troubled with a couple minutes doing what the Memorial was built for but, just in case, here’s a list so you can have your man find them and point them out to you. Hope you have a Meaningful Memorial Day.”

Joseph J. JONES; 53-W-02
Sherwood David Kreis, 42-W-40
Dale Kagebein, 34-W-50
Jerry Bock, 25-W-95
Larry Daniels, 09-E- 66
Joe Mack Kemp, 09-E-69
Rhonda L. Raglan, 09-E-70
Robert L. Studards, 09-E-71
Jose D. Flores, 09-E-74
Arthur Willie Greene, 14-E-56
Eric Barnes, 17-E-41
Godfried Blankenship, 17-E-48
Michael Ray Smith, 19-E-113
Ervin Lovell, 19-E-120
William D. Martin, 25-E- 87
Michael L. Laporte, 26-E-1
Ronald Frederick Kitzke, 32-E-76
Charles Harris, 34-E-48
Robert Tracy, 34-E-72
Michael G. Murdock, 36-E-57

Sun, 06/03/2012 - 08:41 | 2488835 MFL8240
MFL8240's picture

Very simple, HE IS NOT AN AMERICAN.

Sat, 06/02/2012 - 17:37 | 2487817 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 dizzyfingers

Sat, 06/02/2012 - 17:10 | 2487769 Heroic Couplet
Heroic Couplet's picture

Three words: Commander in Chief.

Sat, 06/02/2012 - 17:20 | 2487784 Winston Churchill
Winston Churchill's picture

Kenyan Commander in Chief.

Or was he naturalised Indonesian,just born in Kenya ?

Or is it Narcissist in Chief ?

Guy lies so much ,even he cannot remember the truth.

Sat, 06/02/2012 - 18:42 | 2487908 q99x2
q99x2's picture

Its a planned collapse. He's a CIA agent from Kenya. He has a huge department of Homeland security and NATO that he intends to kill us with.

Nobody is sure who he works for.

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