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The Triumvirate of Wall Street/ The Fed/ and the White House is Beginning to Crumble
The Obama administration, as it pursues re-election in 2012, is doing all it can to claim that the US economy is in fact not quite as bad as previously thought. One of the tactics is to massage GDP and jobs data. True, this practice has been in place for over a decade, but the recent January jobs report from the BLS has set, shall we say, a new high-water mark for “adjustments.”
According to the BLS, we ADDED 243,00 jobs that month. That’s an odd claim given that the BLS admits, in the very same report, that without adjustments, the US actually LOST 2.69 MILLION jobs in January.
This is roughly a discrepancy of 3 MILLION jobs. And this 243,000 jobs number for January also comes along with revisions that saw roughly 50,000 jobs added in both October and November.
So according to the BLS, the US is on the upswing again, maybe not in a HUGE way, but overall things are improving: we’re adding jobs and unemployment is falling (from 8.5% to 8.3%).
These numbers make the Obama administration look good, at least relative to how it’s looked in the previous 12 months. However, they’re not reflecting as positively on two of Obama’s primary support groups: Wall Street and the US Federal Reserve.
As a brief refresher, let’s take a look at Obama’s top campaign contributors in 2008:
Altogether, the finance industry ponied up $24 million for Obama in 2008. And Wall Street has not only been cutting their growth forecasts but has actually been firing people based on the fact the economy is so rough.
N.Y. faces 10,000 Wall St. cuts through 2012
(From October 2011)
Bank of America Corp. plans to cut 30,000 jobs over the next few years, while UBS AG intends to shave 3,500 jobs and Goldman Sachs Group expects to eliminate 1,000 jobs.
http://www.marketwatch.com/story/ny-faces-10000-wall-st-cuts-through-2012-2011-10-11
As for the forecasting component:
Wall Street banks curb economic growth forecasts
(From January 2012)
Wall Street banks lowered their outlook for U.S. economic growth due to concerns over the European debt crisis, oil prices, regulatory uncertainties and "continued disarray in Washington," according to a financial industry survey released on Tuesday.
The survey, which included bankers from Morgan Stanley, Wells Fargo Securities and Citigroup, forecast that the U.S. economy will grow at a rate of 2.2 percent this year, down from a previous forecast of 3.1 percent.
http://finance.yahoo.com/news/wall-street-banks-curb-economic-180224475.html
The January jobs report not only makes these guys look like they can’t forecast anything… but that they don’t even know how to run their own businesses. It also adds to the image that they’re heartless and will lay people off to maintain profits (if the economy is improving, why are they firing people?)
This is not exactly the best policy to maintain for constituents who have put up some big money for Obama’s campaigns in the past. One wonders if Obama’s campaign managers considered this.
The January jobs report also reflects poorly on the White House’s monetary buddy, the Obama’s administration’s “go to” guy for any kind of uptick in economic data: Ben Bernanke. After all, the Fed has also been cutting its growth forecasts and expecting higher unemployment.
US Fed cuts growth forecasts for 2012
(From November 2011)
The Federal Reserve said it now expects US growth to be weaker and unemployment higher than it thought in its last set of forecasts, as the central bank left the door open to fresh measures to help the world's biggest economy.
http://www.telegraph.co.uk/finance/economics/8866407/US-Fed-cuts-growth-forecasts-for-2012.html
Fed foresees weak US growth through 2014
(From January 2012)
The Federal Reserve cut its US growth forecast Wednesday and said that with business investment and the housing sector depressed, it expected to keep interest rates near zero for another three years.
Despite an upturn late last year, the Fed said ongoing economic weaknesses and strains in global financial markets mandated continued easy-money policies…
"I don't think we're ready to declare that we have entered a strong phase at this point.
So add the Fed to the group of people Obama’s jobs report leaves looking less than on top of things. On a side note, it also makes the likelihood of more QE or monetary easing from the Fed more remote (if the economy is improving, they have no reason to announce more policies… which is not positive for asset prices… or Wall Street).
This all returns to two primary themes I’ve been expounding on for months now: that the political environment has changed dramatically in the US and that we are going to see escalating tension between Wall Street, the Fed, and the White House.
The reason for this is simple: the public is growing more outraged by the minute. That anger will have to be directed somewhere. And when push comes to shove, it’s likely we’re going to see some actual real litigation relating to what happened in 2008-2009.
When this happens, the whole Fed/ Wall Street/ Politician triumvirate will begin to change dramatically. Some of these groups will try to portray themselves as “men of the people” (Obama is doing this, and so is the Fed with its recent town-hall meetings and Bernanke’s efforts to appear like a average joe who reads his kindle).
Others will prepare for battle (Goldman Sachs’ CEO has hired a defense attorney).
How this will all play out remains to be seen. But the debt markets are going to speed this process up dramatically as Europe implodes and the great debt implosion comes to the US. With 48% of US citizens living in a house in which at least one person receives Government aid, you can imagine the impact that the sort of large cuts in social welfare programs that a debt restructuring in the US would have on the political process in here.
My assessment, this January jobs report is the tip of the iceberg. Tensions will be rising in the US over the next 12 months. How exactly this will play out remains to be seen (there are too many factors), but changes are coming to the political arena as well as the monetary balance between Wall Street and the Fed (remember, the Fed actually sued Goldman Sachs last year). These changes will be dramatic.
Swing by www.gainspainscapital.com for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.
Best Regards,
Graham Summers
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Whatever the catalyst that finally topples this great festering pile of central bank foisted feces, it will be something that isn't quite on many peoples' radar as I type this. It will also be further down the road than most expect.
How is it that a publicly funded university, top of the list, can donate to political campaigns?
Much like my state's department of education using my tax dollars to back officials who will get them more of my tax dollars.
As far as the Obama administration crumbling, does it really matter who is in the white house if the same oligarchs are pulling the strings?
Wise to avoid a market call.... A first for you...must be a top
Where in the frick is that Jon Corzine guy? Seriously, haven't heard much about his since he robbed his clients blind.
HE'S BUNGLING, ER BUNDLING FOR OBAMA...
This is bad news for the economy. The Fed/Wall Street/Politician Triumvirate is the only part of the economy doing well. Good thing gas prices aren't going up. Ooops, spoke too soon.
This is someone elses progress... Planet of the Technocratic Primates
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"Its disgusting, the discussions we're not having" - Hakim Bellamy, The Pedagogy of Poetry
Visit: Inflection Point
Thanks for reminding us of the campaign contributions.
McCain's weren't much different.
Great information on candidates on both sides here: www.opensecrets.org
Civil unrest? Here? Can't happen. We Merkins are too stupefied by the TV and the video games and the entertainment complex that we have, literally, fallen asleep. Scary shit. I'm a buy me some shotgun and shells and wait fer the amagedden to hit the shores.
the city of Constantinople in 1182 paid in gold for Andronikos Comnenos to come with an army of 10000 mercenaries besiege the city at the request of Maria Porphyrogenita, daughter of defunct Emperor Manuel I, rival to incumbent empress Marie of Antioch who reigned in name of son Alexios 2.
The money paid by the nationalist Greek clan of Maria against the Latin clan of EMpress MArie resulted in civil war and death of all rivals except Andronikos who declared himself Emperor for a brief reign that ended like it started, in blood.
Blood money, to elect a corrupt king who made Constantinople bleed and rid it of 80000 latin merchants never begets good, just more corruption.
We are not there yet, but in Manuel's days, just two years earlier, the Byzantine EMpire was considered eternel...And, to make things uglier, in 1204, the Latins of Venice and Frankish Cusaders came back to destroy what was left of the "greek" heritage of the Comnenos strain during the FOurth Crusade, as revenge for the uprising of 1182. Nemesis bitchezz!
Its great that History teaches us so much...
/sarc
@ falak pema
and now Constantinople (aka Istanbul) is in Turkey. So there it goes.
disband the DEA and the (gestapo) Dept Homeland insecurity those will save a lot of bucks Then terminate all the "black" budget items
No one is safe. A lot of good your bag of pm's will do when you're surrounded by 100,000 people that don't have any. ETC ETC ETC.
Overwhelming firepower...the tactic of our military..that's how to survive.
It's like the people stepping out of their impenetrable bunker after the nuclear war after going through all of their provisions. They look up at the cloudy cold sky and see all the dark brown mud surrounding them and congratulate themselves for having survived the nuclear war.
Exercise for all you mathies. Go get the BLS's (as well as just about any other .gov) seasonal adjustment factors for just about any data series.. Revise them from whole numbers to percentage changes. (eg 1% becomes 1.01, -1.0% becpomes .99, etc)
Link said numbers as you would any compound interest calcualtion.
I guarantee you, the linked result of the Seasonal Adjustment Factors over the Seasonal Adjustment Time Horizon/Period will yield a significantly larger number than 1.0.
Called bias.
Upward bias to raw data.
Due to "seasonal adjustment"!?!?!?!
Been that way since the '70's.
Every time I ask an economist or statistician about it, they go "Huh?" or "Uh?", "I dunno" or "Lemme look into that."
Called fudging the numbers.
Sly shit, huh?
My poop is bigger than your poop, when seasonally adjusted!
Go figure.
Projecting ahead ... at this rate only a hundred people will be left with jobs in the U.S. in ten years. Of course, they will be generating a GDP of $45 trillion between them so it will be okay for the figures.
I thought that about 25% of the new jobs were jobs helping people find jobs. Even though they're cutting 110,000 military jobs and 200,000 postal worker jobs, it seems like Obamas budget and the military budget went up from last year. Ooops. It's a good thing interest rates are low.
Obama wants some "spreading around" money for his election...
Unfortunately the amount of foreign capital needed to influence his election is in short supply.
The problem is, there are a lot of parties with their hands out, not the least of which is the IMF and the EU.
Bernanke is out. A weak replacement will leave the banks vulnerable to investigations they can ill afford.
We must love Serfdom. There is no other explanation...
The real crisis won't come until 2016 and soon after. It will then be clear by 2016 ( after yet another contentious presidential election) and soon after that Mitt Romney (he will be elected in 2012) was as big a failure as Obama. In fact, if he actually holds to his promise of actually cutting government spending, not just reducing the rate of growth in spending, he will have initated the second round of the Great Depression 2.0
Obviously the Democrats will jump all over this as a failure of laisezz faire capitalism and will win the 2016 election and reinstitute horrendous spending and the twisting back and forth of both the economy and the public opinion over what should be done coupled with the realization that NEITHER POLITICAL PHILOSOPHY, RIGHT OR LEFT, CONSERVATIVE OR LIBERAL, REPUBLICAN OR DEMOCRAT has any answer to the inevitable collapse of America just like Japan had no answer, just like Greece has no answer.....all this will combine sometime soon after 2016 into genuine crisis and civil unrest on a large scale.
This prediction is also bolstered by the fact that by 2016, Social Security will be insolvent as well as Medicaid....so much so that no amount of accounting shenanigans can hide the fact. Also Peak Energy, despite of all the hullabaloo over the Shale play will be an acknowledged fact by everyone even the skeptic if from nothing else but from the price inelasticity we have now which will be even worse by 2016.
This means only one thing.....particularly if Ben Bernanke or someone else of his ilk is at the seat of the real power in America....QE infinity. And then we will finally have the big inlfation blow out which will be sold, as before, as the answer to the deflationary abyss once again staring us in the face.
2012 is not the apocalypse...but it is the prelude....it will be the dress rehearsal for 2016 and soon after.
Mitt Romney is not the next President.
But I agree with your sentiment that there are no solutions. The system is built on fraud and excess. If the banksters had been less greedy, and the political whores had used more foresight we could have kept on going.
Fraud or "freaks of nature" have no basis of long term survival. There is effective yield and there is imaginary yield to fuel a ponzi. Eventually reality will set in that money doesn't grow on trees and chopping more trees to print more money does not increase yield.
Takes balls to put dates out here for conversation. Well done Jumbotron. Certainly is plausible. We have already seen how resilient the system is - largely as a function of society which is either in denial or mostly too damn brainwashed to even accept that the game has changed. Paradoxically we have seen how fragile it is as well - particularly in how interwoven the financial world has become. The writing sure seems to be on the wall though - that anything and everything will be done to protect the system. The wild card here might be the MIC. 2014-15 might be your 2016 - but, I would certainly be splitting hairs here in the grand scheme of things.
Thanks, centerline. Just a WAG based on constant research since 2008 (everyone has to have a hobby I guess ;)
Yeah 2014-15 could be just as well. There is always that point in which things go south quick. Every big structure has micro-cracks in it. The rub is determining how many constitute a mortal threat. Sometimes that happens between routine maintenance checks.
When you throw the psychology of the masses against the wall of pathology of the politicians and the Whores of Wall Street....well.....shit can happen at any time. But, as you stated,,,"We have already seen how resilient the system is" is a factor in my equation.
Although I would not attribute it so much to resilience but the absolute brilliantly evil ways these Masters of the Universe keep the whole rickety piece of shit afloat.
But all Ponzi's fail.....this along with taxes and death is absolute.
We don't have that much time....
You should plan on months, not years
Plan on both IMO. Don't wait. But, don't start expecting anything major to occur anytime soon either. Is amazing how far things can play out (and how quickly it all changes too).
Wow, imagine if the University of California actually spent that money on educating Califonians? Well, one can dream. Fucking sick, there simply is nothing else one can say. Apparently America desparately wants to have its own "Weinmar" moment
As a Berkeley grad, sitting here in my Golden Bear t-shirt, I had no idea what my liberal alma mater was doing with respect to campaign contributions. It's quite clear to me now that if they have enough money to contribute to a loser like the Big O, then they no longer need my annual donations to help them.
Laws - the U Cal investment brought in many more $$ in Federal research grants and the like than was donated to Oblama. That is how facsism works....
What percentage of those grants are for departments of economics ? would you know ?