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David Stockman: "The Born-Again Jobs Scam"

Tyler Durden's picture


Submitted by David Stockman, author of The Great Deformation,


No, last week’s jobs report was not “strong”. It was just another edition of the “born again” jobs scam that has been fueling the illusion of recovery during the entire post-crisis Bernanke Bubble. In fact, 120,000 or 62 percent of the June payroll gain consisted of part-time jobs in restaurants, bars, hotels, retail and temp agencies. The average pay check in this segment amounts to barely $20,000 per year, which is a sub-poverty level income for a family of four, and compares to upwards of $50,000 per year for goods producing jobs in the BLS survey.

Altogether, the government has reported 2.8 million of these part-time job gains since the Great Recession officially ended in June 2009, accounting for a predominant share of the ballyhooed pick-up of 5.3 million total jobs.  It goes without saying, however, that the principal of one-job-one-vote does not apply in economics. What matters are aggregate dollar earnings. On that front, the Commerce Department figures for total private wage and salary income are just plain punk. Nearly six years on from the December 2007 peak, real payroll disbursements are still down by nearly 1 percent. What kind of “recovery” is that about?

Measured on an income equivalent basis, then, a majority of the big rebound in the BLS headline number has consisted of “40 percent jobs”. Granted, these fractional jobs do provide a monthly feed to headline stalking HFT algos and the gist for the moronic jobs number guessing game conducted by unemployable Wall Street executives otherwise known as “street economists”. But not by a long shot do they prove that the Fed’s money printing spree is beginning to bear fruit, as claimed by the cheerleading section of the Wall Street Journal shortly after the BLS release.  

Indeed, once upon a time financial journalists actually worked for a living by digging for facts, rather than simply re-posting the spin issued by Washington’s various ministries of truth. In this instance, even a modicum of investigation by the WSJ would have revealed that the 2.8 million part-time jobs “created” since June 2009 reflect the rebirth of the very same 2.8 million jobs that were first generated between 2000 and 2007. That this obvious fact has been completely ignored is not surprising. After all,  the reigning doctrine in the Keynesian puzzle palace inhabited by officialdom and financial journalists alike, calls for digging and refilling economic holes as the national policy of first resort.

The BLS data exhibit this syndrome with uncanny exactitude. In early 2000 there were 34.7 million jobs in the part-time economy. In response to the dotcom crash, the Fed ignited the housing and credit bubbles via Greenspan’s 1% money experiment, causing a consumption boom fueled by home ATM withdrawals and other consumer borrowings.  Accordingly, activity rates in leisure and hospitality, retail and personal services (think yoga teachers and gardeners) temporarily soared, with the part-time job count climbing by the aforesaid 2.8 million by late 2007. But this peak of 37.2 million part time jobs was pure bubble economics--- attested to by the fact that every single one of these new jobs vanished during the 18 months of bubble liquidation otherwise known as the Great Recession. Indeed, when the NBER declared the bottom in June 2009, the part-time job count stood at 34.5 million, a hair under where it started at the turn of the century.

Now, after four years of money printing madness, the Russell 20000 has been reflated from 350 to 1000, junk bond yields have dropped from 20 percent to 5 percent, bombed-out housing markets like Southern California and Phoenix are on crawling with speculators and deader-than-a-doornail Fannie Mae preferreds are the new bonanza of the month.  The con artists who run Fairholme Capital even claim to own $2.5 billion worth (face value) and are suing the Federal government to collect the vast windfall gain on these mummified securities that has been enabled by Uncle Ben’s free money casino.  Needless to say, the massive asset reflation catalyzed by the Fed in these instances and throughout the financial markets has caused the affluent classes to start spending again, thereby reflating the part time jobs bubble as well.

Right on taper time eve, in fact, the June jobs report clocked-in at 37.5 million part-time jobs, that is, virtually dead-on the prior bubble peak level of December 2007. As shown below, however, no jobs have been “created” at all. These part-time jobs have simply been born again, courtesy of the Fed’s delusional belief that its frenzied bond-buying is causing the labor market to heal.

Some kind of faith healing, that! Set aside the serial bubble pumping cycles and examine the longer-term trend in the graph.  During the last thirteen and one-half years the Fed’s balance sheet has expanded from $500 billion to $3.4 trillion, and the overwhelming rationalization for this 7X gain is that the nation’s central bank needed to prop-up the financial system and “stimulate” the GDP in order to generate new jobs.


But don’t start the drumroll on that score. On an FTE (full-time equivalent) basis, total growth in hospitality and leisure, retail, personal services and temp agencies, that is, the part-time economy, amounts to just 1.1 million job equivalents during the entirety of this century to date. That’s 7,000 per month. It’s a drop in the proverbial bucket.

The self-evident implication of this born again jobs saga is that the nation’s employment problem is structural and an enduring consequence of the end of the 30-year debt super-cycle, not a cyclical shortfall that can be fixed by juicing the speculative classes.  Indeed, a brief glance at the horrid trend in “breadwinner” jobs demonstrates in spades that the problem is structural and therefore wholly outside of the Fed’s remit---even granted its spurious claim that it is printing money with reckless abandon because its “dual mandate” requires it.

The “breadwinner jobs” category includes construction, mining, manufacturing, the white collar professions, business management and support services, financial services, information and technology, government service excluding education, wholesale trade, transportation and warehousing and real estate agents, among others.  This is the heart of the Main Street economy, where the average pay-rate is upwards of $50,000 annually---just enough to support a family, at least in some lower cost regions.  Here the June BLS report clocked-in at 67.56 million jobs (50 percent of the NFP total), and there was nothing whatsoever impressive about the number. As shown below, breadwinner jobs have been shrinking at a stunning rate for the entire duration of the 21st century.

During the second Greenspan Bubble in housing and credit, which was celebrated to the bitter end by Wall Street touts as the “goldilocks economy”, a very telling trend unfolded: On a peak-to-peak basis, not a single new breadwinner job was created, even as the Fed’s measure of household net worth (flow-of-funds report) soared from $43 trillion to $67 trillion over this seven year period. All that gain in bubble wealth, yet the count of breadwinner jobs was static at 71.9 million!

And then the real carnage began. By the bottom of the Great Recession nearly 8 percent, or 5.7 million, of these breadwinner jobs had disappeared.  Worse still, most of them are still gone, notwithstanding four years of furious money printing and month-after-month of “encouraging” headline job gains.  All told, the 1.3 million pick-up in breadwinner jobs since June 2009 amounts to just 25 percent of the recession period collapse. Stated differently, at the anemic rate of breadwinner jobs recovery during the four-year Bernanke Bubble to date, it would take until 2025 to get back to the level that existed in January 2000---a time when the nightmare of a George W. Bush presidency was only a mote in Karl Rove’s politically myopic eye.

Unfortunately, in the vocabulary of late night TV, that’s not all. About 15 percent or 11.1 million of these breadwinner jobs are accounted for by local, state and Federal payrolls outside of education. And from an income viewpoint, these are the top tier because average government payroll disbursements (excluding benefits) amount to more than $65,000 per year. Yet a funny thing happened on the way to today’s taper-time-turmoil. Through June 2009 government payrolls grew by 10 percent from the turn of the century level. Only after the fiscal stimulus frenzy of 2008-2009 finally exhausted itself did the government job count finally roll-over during the last several years and begin an inexorable long-term decline, as the nation descended into permanent fiscal insolvency.

Thus, the miserable breadwinner job trend shown below actually understates the nation’s structural employment problem---even as that cardinal reality  remains virtually unknown to our feckless monetary politburo. To be precise, there were 61.5 million full-time breadwinner jobs in the private sector during January 2000.  Setting aside the shrinking government sector jobs embedded in the graph below, there were just 56.5 million private sector breadwinner jobs contained in the allegedly “robust” report for June 2013.

Indeed, we have been losing private sector breadwinner jobs at the rate of 31,000 per months for thirteen and one-half years running. Yet the Keynesian money printers who inhabit the Eccles Building insist that the problem is cyclical and that just a few more months of lunatic bond-buying will bring the labor market back to full employment health.  If the Cramer noise machine had a “sell” button, it would be screaming at the top of its lungs.


Of course, it is no mystery as to why we have a structural employment problem and why the Fed’s monetary madness will only produce recurring cycles of boom and bust in both risk assets and born-again jobs. The fact is, two and one-half decades of Greenspan-Bernanke monetary profligacy have resulted in the off-shoring of much of America’s tradable goods sector—so the Main Street economy’s potential growth and productivity have been deeply impaired. Likewise, the Fed fueled an extended run of artificial GDP expansion via the buildup of massive credit market debt (from $10 trillion to $57 trillion during that 26-year period), but the America economy has now exhausted it capacity to take on more leverage.  And during all that time the Fed’s interest rate repression and stock market coddling policies were generating countless growth and wealth destroying deformations and malinvestments throughout the nation’s economy.

For instance, the combination of Fed interest rate repression and fiscal subsidies through the tax code and the GSEs caused massive mis-allocation of capital to new housing and the related strip-mall infrastructure. But when the housing bubble finally collapsed and the market attempted to drastically mark-down inflated asset prices and drive capital out of the sector, the Fed crushed the pricing mechanism in mortgage and real estate markets, re-ignited the housing refi machine and caused capital to once again flow up-hill.

The sight of $5,000 suits riding into Scottsdale AZ on the back of John Deere lawnmowers while carrying brief-cases full of 2 percent wholesale money in order to become buy-to-rent-and-flip single family landlords says all that is necessary about the extent of growth and job-destroying resource mis-allocation that have been enabled by the nation’s monetary central planners. Likewise, until the taper scare slightly sobered-up fixed income markets during recent weeks, the LBO strip-mining machines were back at work substituting cheap debt for payrolls, that is, implementing endless rounds of job “restructurings” in order to pay the interest. And the stock buyback machines in the corporate sector were working over-time leveraging up balance sheets, not to acquire productive assets, but to fund record share buybacks---thereby goosing stock prices and the value of executive options.

 Indeed, here the myth of deleveraging has reached its apotheosis. Business sector debt, according to the Fed’s Z1 report, is now just shy of $13 trillion. That’s up $2 trillion or nearly 20 percent from the 2007 pre-crisis peak, and represents an all-time record at 81 percent of GDP. By contrast, the fabled cash hoard of American business is up by less than $400 billion since December 2007----hardly evidence that there is massive corporate cash on the sidelines waiting for Bernanke to give the all-clear.

In short, Fed policies are mangling the Main Street economy by disabling the pricing mechanism in all financial markets, diverting capital to unproductive speculation and rent-seeking and leaving genuine entrepreneurs and businessmen adrift in a fog of financial disorder. Needless to say, the result is tepid growth of incomes and jobs----a lamentable condition that the Fed cannot fix with “moar” monetary stimulus because decades of the latter are what has caused the problem.

More importantly, the impossibility of fixing a structural problem with Keynesian cyclical medicine means that the monetary politburo will descend into an ever more incoherent babble as the “incoming data” fail to match its clueless forecasts. In this regard, not only were Wednesday’s minutes an embarrassing exercise in Washington pettifoggery, they were also self-evidently a fraud and lie-----spun well after the meeting in an attempt to undo Bernanke’s original message.  It is bad enough that the nation’s vast, infinitely complex $16 trillion economy is being run by an unelected 12-person monetary politburo. But now the commissars have completely lost both their bearings and their credibility.

Under these circumstances healthy capitalist financial markets would be afraid---very afraid.  But there are no honest markets left----just a big romper room where the boys and girls and algos endeavor to extract windfalls from central bank word clouds. Still, the magnitude of the deformation that the Fed has wrought in the financial system cannot be under-estimated:  there remain even now tens of thousands of punters, fund managers and home gamers who do not see the Fed’s desperate incoherence, believing instead that “the market is cheap” and that buying the dips is a no loose proposition.

Let’s see. At the last bubble peak in early October 2007, the S&P 500 was only 100 points (or 5%) below today’s lofty peak, and it was deemed to be cheap by the 11th hour bulls at that moment because forward earnings were projected to be $110 per share, thereby trading at less than 16X.  As it happened, 2008 earnings ex-items came in more than a tad lower---- at $55 per share to be precise and actually at only $15 on the basis of honestly reported GAAP earnings.

In truth, at that moment in time financial bubbles---subprime, CDOs, monster LBOs, a raging Russell 2000--- were evident everywhere in the financial system. So in late 2007 the market was not cheap even on a paint by the numbers basis.  At the end of the day, the only honest and reliable earnings number in today’s deformed capital markets is 12 month trailing GAAP EPS. The billions that Washington wastes on financial cops each year policing corporate SEC filings at least accomplish that much. At the 2007 peak, therefore, the market was actually trading at 19X earnings on an honestly accounted basis.

So here we are again, and the LTM earnings number on a GAAP basis for the S&P 500 is $87.50 per share. We are back at 19X trailing profits.  Too be sure, forward earnings ex-items are exactly as before---once again at $110 per share. So the market is purportedly “cheap” but here’s the skunk in the woodpile:  honest LTM GAAP earnings have been stuck at $87 per S&P 500 share for seven quarters---since Q3 2011.  In short, true earnings are not growing, China and the BRICs are rolling over, Europe is sinking into economic somnolence, Japan is a massive financial train-wreck waiting to happen, and based on the latest data it would appear that US GDP growth will average hardly 1%  during the three-quarters thru June. That’s stall speed, yet the gambling machines which occupy Wall Street rage on because they believe that Bernanke has their back, that this business cycle will never end and that this latest and greatest financial bubble will never be allowed to collapse.

Why would they believe Bernanke when he has become so lost in his own intellectual fog that he can’t even give an honest number for the inflation rate, which he spuriously claimed to be 1 percent and therefore below target during yesterday’s conference in Boston.  Even on the preposterous assumption that PCE less food and energy actually measures the cost of living for carbon-unit inhabitants of America, there is no 1% number to be found except on a fleeting short-term basis. The inflation rate under Bubbles Ben’s preferred measure, has been 1.7 percent, 2.1 percent and 1.9 percent on a two-, seven- and thirteen-year basis.  The Fed is thus not furiously running the printing presses because it is under-shooting inflation.  It is printing because it is scared to death of the raging gambling machines it has unleashed throughout the financial system.

So Bernanke promises to keep the money market and repo rates----that is, the poker chips for the casino----at zero until  “well after” the unemployment rate drops below 6.5 percent.  But it will never get there because the jobs market and Main Street economy are structurally broken.  Indeed, measured on a consistent basis, the unemployment rate is still over 11 percent based in the labor force participation rate of late 2008 and is over 13 percent based on the labor force participation rate at the turn of the century.

And no, that can’t be explained away by the baby boomers going on Social Security.  During January 2000 there were 75 million Americans over age 16 that did not hold a job. Today there are 102 million in that category---about 27 million more. Yet the number of participants in OASI (old age social security) is up by just 6 million during the same period.  Moreover, there is no doubt about what happened the other 21 million citizens:  they are on disability, food stamps, welfare or have moved in with friends and relatives or landed on the streets in destitution.

In short, the US economy is failing and the welfare state safety net is exploding. And that means that the true headwind in front of the allegedly “cheap” stock market is an insuperable fiscal crisis that will bring steadily higher taxes, lower spending and a gale-force of permanent anti-Keynesian austerity in the GDP accounts. And for that reason, the Fed’s strategy of printing money until the jobs market has returned to effective “full employment” is completely lunatic. 

As shown in the graph below, the remaining jobs in the NFP report for June are accounted for by the HES Complex----that is, health, education and social services where the June job count clocked in at 30.8 million. The self-evident headwind here is that the HES complex is effectively a ward of our bankrupt state. Nearly all of the funding is attributable to massive tax subsidies for employer provided health insurance, the ballooning cost of Medicaid and Medicare, soaring subsidies which will soon be arriving under the Obamacare health exchanges, and the near total dependence of the education system on the public purse, most especially the runaway student loan program.

There are two powerful trends embedded in the graph that make a mockery of the labor market obsession of Fed  governors like Evans, Dudley, Yellen and Rosengreen, to say nothing of the money-printer-in-chief.  First,  as the fiscal vice tightens, the rate of job growth even in this long-time bastion of employment gains has slowed sharply. The pick-up averaged 49,000 per month during the Greenspan Bubble, fell to 40,000 per month during the Great Recession and has cooled to only 24,000 per month during the Bernanke Bubble of the last four years.

But should job growth in the HES Complex grind even lower, which is a near fiscal certainty, the proverbial naked swimmers will get full exposure.  That is to say, outside of the HES Complex, the count of non-farm payroll jobs has been shrinking on a net basis for this entire century!  There were 106.5 million non-HES Complex jobs in January 2000 but more than 13 years later last month’s “strong” report sported only 105 million!

So what is happening at bottom is that Bernanke is printing money so that Uncle Sam can keep massively borrowing, and thereby fund a simulacrum of job growth in the HES Complex.  Call it the Bed Pan Economy. 

When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so.


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Thu, 07/11/2013 - 21:43 | 3743664 Eireann go Brach
Eireann go Brach's picture

How dare you question the Obama recovery, and surely the greatest, hard working, articulate, honest and outstanding president that America will ever know!

Thu, 07/11/2013 - 21:46 | 3743671 ACP
ACP's picture

Shit, at least Hoover built something. What the hell did Berfuckme do besides destroy the US economy?

Thu, 07/11/2013 - 21:48 | 3743682 King_of_simpletons
King_of_simpletons's picture

This is the new normal. Get used to it. With limitless supply of money the piper can be paid off and the levy can be patched from time to time.

Thu, 07/11/2013 - 23:30 | 3743945 Seeking Aphids
Seeking Aphids's picture

The money supply is not is a function of what the RETW is willing to put up with...and that is coming to a close......good-bye the $Us as a reserve over, do not pass go, do not collect $200 Trillion.........

Thu, 07/11/2013 - 22:31 | 3743748 DormRoom
DormRoom's picture

lol.  Rumors are Larry Summers wants the Fed chairmanship.  Can you even imagine the bubbles he would blow?


If Summers is nominated, it's evidence that the narrative about a recovery is a sham.  You only nominate Summers, if collapse is imminent, and the big banks want someone to rescue them--again.  Afterall, he was the chief architect for financial de-regulation under Clinton.

Thu, 07/11/2013 - 23:08 | 3743895 WTFUD
WTFUD's picture

Arselick Larry, Oh boy, you could land a helicopter on his nose.

Fri, 07/12/2013 - 03:26 | 3744255 Gumbum
Gumbum's picture

It does not matter who is chairman...he has his boss and the gameplan does not change.

Thu, 07/11/2013 - 21:56 | 3743701 Everybodys All ...
Everybodys All American's picture

So good the narcicist is convinced you'll never need to vote again.

Thu, 07/11/2013 - 22:57 | 3743865 HowardBeale
HowardBeale's picture

/sarc off for Eireann go Brach..


When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so.


"When" is "Now;" if a vigilante stumbled upon the cretan while he was buying moar ink for his daddy the Squid, there would be dancing in the streets...

Fri, 07/12/2013 - 00:53 | 3744079 im2of5
im2of5's picture


The exquisite analysis in the article is totally irrelevant to making momey in the stock market.

Isn't that why we are all reading ZH's articles?

Read the figures the Government publishes just like any other Investor does. Then invest accordingly and do not question the figures. Try to be too smart and you will do the opposite of most traders, leading to being short-squizzed and then wondering what happened.


Bottom line: marvel at these super intelligent articles, but don't let these guide your trading decisions.

Fri, 07/12/2013 - 02:24 | 3744193 macholatte
macholatte's picture


Luck is when preparation meets opportunity.

                God grant me the wisdom to know the difference.



Fri, 07/12/2013 - 02:08 | 3744169 Colonel Klink
Colonel Klink's picture

Just reading that gives me a barely controllable vomit reflex.  GAWD!

Fri, 07/12/2013 - 12:06 | 3745473 sgt_doom
sgt_doom's picture

The fundamental reasons for the pathetic jobs situation is the offshoring of American jobs (step one in the process is usually bringing foreign visa [scab] workers to America, to return to their homeland as trainers and managers, for the expediting of that jobs offshoring process), and the dismantling of the consumer-based economy over the past thirty some years, replacing it with the fantasy finance-based economy, utilizing serfveillance to control everything.

Between July 1999 and July 2009, the BLS study reported essentially no new private sector job creation in America, but there was plenty of jobs offshoring, and the creation of new jobs overseas.

Catch a clue, doods.  (Those health exchanges pertaining to Obamacare --- the D.C. contract has already gone offshore!)

Thu, 07/11/2013 - 21:43 | 3743665 Nid
Nid's picture

Spot. the fuck. on.

That is all.

Thu, 07/11/2013 - 22:10 | 3743740 NoDebt
NoDebt's picture

I started the article with a "I already know this" attitude.  When I finished, to my surprise, I had a clearer understanding of why I know we're doomed (and why for the vast majority of people this IS a Depression, not a recession).

I am wary of Stockman for a multitude of reasons, but I'll be damned if this guy's stuff isn't growing on me despite my reservations.


Thu, 07/11/2013 - 23:04 | 3743884 HowardBeale
HowardBeale's picture

If you enjoyed that, you would no doubt love: The Great Deformation (Stockman, David)

I'm not sure if it is a ZeroHedge acquired taste for sarcasm, wit, and an actual factual basis for claims made about reality, but Stockman nails it in that book; it is a page turner. At times you laugh; at other times you throw your beer mug at the TeeVee (don't have one, but I like scenario is so visual). All in all, one of the better long reads (3 inches thick!) I've ever experienced.

Fri, 07/12/2013 - 05:34 | 3744314 prains
prains's picture

reading it now and it's page after page of WTF

Thu, 07/11/2013 - 21:43 | 3743667 Long-John-Silver
Long-John-Silver's picture

Obamacare is the fuse that's going to blow this MF up.

Thu, 07/11/2013 - 22:13 | 3743750 NoDebt
NoDebt's picture

It may be just that.  For sure, when the history books are written generations from now, this will be known as the era of denial and stupidity.

Thu, 07/11/2013 - 21:49 | 3743673 Theta_Burn
Theta_Burn's picture

Bernanke's retirement will be fine, so fret not. "the most reviled", he won't give a fuck because hell be collecting speaking fees and writing books..

Thu, 07/11/2013 - 21:50 | 3743678 EmmittFitzhume
EmmittFitzhume's picture

"When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so."  



And he is a republican. Now I don't delineate much difference between the parties, it will give democrats all the more ammunition to blame the other party and insist that more liberal spending policies are the solution.  This type of policy is here to stay until it all falls apart.

Thu, 07/11/2013 - 21:59 | 3743710 Everybodys All ...
Everybodys All American's picture

He's not a republican. He's a jackass like Obama.

Thu, 07/11/2013 - 22:06 | 3743725 EmmittFitzhume
EmmittFitzhume's picture

According to the MSM (wikipedia) he's a republican. I think this is all by design. Political affiliations are all part of the plan to divide the voting pool and keep up their theft

Thu, 07/11/2013 - 22:16 | 3743762 Everybodys All ...
Everybodys All American's picture

Labels matter very little especially when you consider that Obama is a democrat. Yeah right a democrat who has openly stated he will act alone by executive order when necessary.

Thu, 07/11/2013 - 22:18 | 3743769 EmmittFitzhume
EmmittFitzhume's picture

You've missed my whole point. I'm talking about how these people get elected and keep this bullshit going.

Thu, 07/11/2013 - 22:19 | 3743774 NoDebt
NoDebt's picture

Don't put much stock in the R vs. D thing- it's a distration at best.  This is group-think in the extreme on both sides.  Bernanke is, first and foremost, an academic.  And therefore, by definition, a statist and a member of the status-quo. 

Obama looks back at the 60s, Bernanke looks back at the 30s.  Nobody looking at where we are now.

Thu, 07/11/2013 - 22:51 | 3743855 EmmittFitzhume
EmmittFitzhume's picture

I agree! I guess I am just not being clear.  Most of the people that maintain the status quo are the ones who believe the R vs D shit. The "blue pillers" if you will. All I'm saying is that the MSM is going to play up the political affilitaion when the next election comes. And the shell game will continue.  I know what reality is, just like most people here. But most people don't want to be unplugged.

Fri, 07/12/2013 - 10:03 | 3744807 GoldenTool
GoldenTool's picture

Down arrowed all of you for your R/D crap and making me waste my time scrolling around it.

"scientia potentia est"

Thu, 07/11/2013 - 23:12 | 3743901 grgy
grgy's picture

He's an Eisenhower Republican.  Read his book. He trashes all Republican presidents since Ike.

Thu, 07/11/2013 - 23:55 | 3743989 Notarocketscientist
Notarocketscientist's picture

Would you just FUCK OFF with your 'he's a replublican'   You are NOT welcome here.  Go back to watching Duck Dynasty and cramming cheetos into your maw.

GOP - DEM are the SAME - they are front men - they are bought and paid for.

I refuse to have to explain this day after day after fucking day.  Obama - Bush - Clinton - Reagan - all cocksuckers - all pawns - they have NO power. 


Fri, 07/12/2013 - 07:48 | 3744421 PhilofOz
PhilofOz's picture

You'd think if they had been reading ZH comments for any reasonable amount of time they'd be awake to the red pill or blue pill they keep choosing for themselves.  Some never get it !

Thu, 07/11/2013 - 23:12 | 3743903 BigSpruce
BigSpruce's picture

The looting has taken its toll. Theres not much more they can steal. Figuratively speaking, they're now grabbing for pennies in our pocket - up next lint.

Thu, 07/11/2013 - 21:50 | 3743689 fonzannoon
fonzannoon's picture

Bernanke knows all this. Greenspan did Bernanke a favor and brought rates up to around 5.25% on the 10yr before he left town. That gave Bernanke the ammo to drop them to 0% and print his ass off. If we were to acknowledge the shit show we were in and the market bombed, there is no room to do anything.

That's why we are where we are, and why we will stay here until we go through the event horizon.

Thu, 07/11/2013 - 22:01 | 3743723 Everybodys All ...
Everybodys All American's picture

The only solution is a market crash.

Thu, 07/11/2013 - 22:05 | 3743728 fonzannoon
fonzannoon's picture

I don't see how that is a solution. Maybe if it was accompanied by some sort of debt jubilee or a soveriegn hard default. Until the debt is cleared, there is no real recovery.

Thu, 07/11/2013 - 22:12 | 3743749 Everybodys All ...
Everybodys All American's picture

Bankruptcys allow for a reset. Always has and always will. If this had been the approach 5 years ago we would not be arguing this today and we would have real growth by now.

Thu, 07/11/2013 - 22:24 | 3743783 NoDebt
NoDebt's picture

Yes, truly and..... that's precisely what we've decided we're not going to allow this time around.  That's the core of the problem.

Thu, 07/11/2013 - 22:31 | 3743798 SDShack
SDShack's picture

Will never happen because of TBTF. It was proven in 2008. TARP was the excuse to bail everyone out and AVOID bankruptcy laws. Cases in point are AIG and GM. Both should have underwent traditional bankruptcy, and neither did. Instead, they bastardized TARP to bail them out. There was no reset, and the die has been cast. There never will be another "structured" reset ie. traditional bankruptcy. It will be rinse and repeat until the "great implosion reset".

Thu, 07/11/2013 - 22:26 | 3743785 kito
kito's picture

A massive market crash of all assets will be the purge that cannot be stopped.It will be after all confidence is lost in the puppet masters. The crash will be a wall of ocean water that will wipe out the investment world that has been built with leveraged digital dollars. That is the only solution. It will be forced on the world. There is no other way.

Thu, 07/11/2013 - 22:29 | 3743793 fonzannoon
fonzannoon's picture

That's all well and good but if it does not end with a true default then all the crash did was seal our debt slavery forever.

Thu, 07/11/2013 - 22:32 | 3743802 kito
kito's picture

Fonz- how is it possible that a massive crash that results from the end of faith in central banks and government would not end in default?

Thu, 07/11/2013 - 22:35 | 3743811 fonzannoon
fonzannoon's picture

I am saying that crash has to end in domestic defaults as well, not us telling china to f themselves. I need to be able to run around my neighborhood naked and moon my cop/firefighter/teacher neighbors.

If I don't get to do that it does not count.

Do I get to do that?

Thu, 07/11/2013 - 22:36 | 3743817 Dr. Engali
Dr. Engali's picture

It's not possible. When this thing crashes all debt based assets and liabilities goes with it.... including physical FRNs.

Thu, 07/11/2013 - 22:41 | 3743828 fonzannoon
fonzannoon's picture

why do we do this to ourselves night after night?

This place is a virtual rubber room and we keep stumbling around banging into each other with our straight jackets on.

Thu, 07/11/2013 - 22:43 | 3743831 Dr. Engali
Dr. Engali's picture

Because if we have these conversations with our neighbors they might tag us with an app like this.

Fri, 07/12/2013 - 11:15 | 3745209 Winston Smith 2009
Winston Smith 2009's picture

"Because if we have these conversations with our neighbors they might tag us with an app like this."

As I pointed out in another post here today in response to a column where the NSA and Stasi were compared, both the Stasi and Gesatpo were as powerful as they were ONLY because of civilian snitches, many of whom volunteered information without even being asked.  So now we apparently have an anonymous app for that.  Add the trillion dollars of police state infrastructure bought with mostly borrowed money since 9/11 and you have Snowden's turn-key tyranny.

Thu, 07/11/2013 - 22:47 | 3743843 NoDebt
NoDebt's picture

Because this is fight club.  We participate because we choose to. 

Stock market: where else you gonna put your money?

ZH: where else you gonna get a good fight?


Thu, 07/11/2013 - 22:50 | 3743849 fonzannoon
fonzannoon's picture

This is fight club? I have sat here for 200 nights straight, eating bon bons and painting my toe nails while telling you guys all the different ways the world will collapse. I weigh 462lbs and my toes look like shit.

Thu, 07/11/2013 - 22:57 | 3743868 Divided States ...
Divided States of America's picture

Fonz u sure u can see your toes?

Thu, 07/11/2013 - 23:01 | 3743880 fonzannoon
fonzannoon's picture

at this point i just spill the polish on the floor and try to rub my bunions around in the puddle.

Thu, 07/11/2013 - 23:30 | 3743944 NoDebt
NoDebt's picture

Ok, ok.  It's VIRTUAL fight club.  And we all show up under assumed names.  It's the WWF (or WWE, or whatever they're calling themselves this week).  We put on our costumes and we do flying suplexes off the top rope.  Still beats the shit out of doing something.

And at least the outcome of the match isn't pre-determined.

Fri, 07/12/2013 - 00:30 | 3744049 grid-b-gone
grid-b-gone's picture

Just looking for confirmation that the emperor has no clothes. No one else seems to notice.

It's like being a believer and telling everyone what they need to do to get to heaven and they react like you're selling Amway. Back in church, they feel normal and recharged.

Worst of all, anyone oblivious, long, and strong is making a good return on their ignorance. So much so that, one by one, reset believers slip back among the pliant masses, leaving only the most strident and stubborn still bellowing for the cause. 

And that's how tops are formed.


Thu, 07/11/2013 - 22:39 | 3743819 NoDebt
NoDebt's picture

Who said that the next crash would result in loss of faith in central banks?  Didn't last time.

Sorry.  My bad.  Sticking my nose in where it doesn't belong.  Disregard.  Carry on, Fonz  et. al. 

Thu, 07/11/2013 - 22:41 | 3743829 kito
kito's picture

Mark my words. When the mother of all bubbles end, it will occur because of loss of faith in the puppet masters.

Thu, 07/11/2013 - 22:44 | 3743834 fonzannoon
fonzannoon's picture

we still have faith in our pupper masters? Or we just are too scared of the alternative?

"WASHINGTON—The U.S. stock market soared to record highs Thursday with the Dow industrial average rallying 144 points after Federal Reserve Chairman Ben Bernanke’s reassuring remarks that the gigantic monsters and robots in the summer blockbuster Pacific Rim looked “super fucking cool.” “I’m quite optimistic that for the foreseeable future, no other movie will even come close to topping the killer fucking battle scenes between those badass robots and crazy sea monster things,” said Bernanke, who guaranteed that investors would not be wasting their money on the upcoming Guillermo del Toro action film, claiming that the awesome CGI effects were totally worth paying “three extra measly bucks to see it in 3D.” “Have you seen the Hellboy movies? That guy comes up with totally crazy creatures. And you actually get to see goddamn robots, unlike those lame-ass Transformers movies. So much shit gets destroyed. Just a great popcorn flick.” At press time, Wall Street continued to have unprecedented gains after Bernanke announced that the film’s star, Charlie Hunnam, “has ‘Next Big Thing’ written all over him.”


Thu, 07/11/2013 - 22:56 | 3743866 NoDebt
NoDebt's picture

"we still have faith in our pupper masters?"

Are you kidding?  Look around you.  We have faith in NOTHING else.  Bernanke farts and the market moves 100 points.  He opens his yap and interst rates climb 100 bps.


The Fed is the ONLY game in town.  DC is a worthless cess-pool incapable of getting out of it's own way and when it does it comes up with abortions like Obamacare.  Entrepreneurship?  Hah!  Steve Jobs is room temperature, my friend.  The Fed can at least change it's mind and chart a new direction (in theory, not in reality of course), but name ONE THING that anyone believes in more than Fed action.  Name one.  You got nothin', right? 

Maybe, someday, in a galaxy far, far away there will be what you call an "alternative", but not now, not today.

Thu, 07/11/2013 - 22:36 | 3743813 SDShack
SDShack's picture

You're right, but TPTB will never allow it. So it will be Extend and Pretend to infinity and beyond. They only way both you and Kito are right is if we have a French Revolution type reset. Otherwise, it's either Extend and Pretend, or the NWO with Debt Slaves and Masters.

Thu, 07/11/2013 - 22:39 | 3743823 fonzannoon
fonzannoon's picture

"if we have a French Revolution type reset. Otherwise, it's either Extend and Pretend, or the NWO with Debt Slaves and Masters."

I agree with that completely, and we must all be skittle shitting unicorns on here tonight if we think that is in the cards.

Thu, 07/11/2013 - 22:55 | 3743864 kito
kito's picture

No. There will be a breaking point. Assured. Want to go double or nothing fonz? Its going to happen.

Thu, 07/11/2013 - 23:00 | 3743876 fonzannoon
fonzannoon's picture

I am having simultaneous conversations right now with you guys and someone else on another site. The guy on the other site is saying that interests rates can rise and it would not affect our ability to service the debt in the least. Here is his explanation. How would you guys grade it. I am absolutely convinced this guy works for the fed.

" total Federal government receipts re $2.965 trillion per year - total for government at all levels is $4.311 trillion per year. And rates are currently lower than that - Federal interest expense is currently $345 billion per year, or 11.5% of Federal revenues, and only about 2% of GDP. That $345 billion is for the whole debt, 30% of which is owned by other government pockets. The net interest paid to public holders is thus more like $250 billion currently, or about 8% of revenues.

(As an historical aside for comparison, immediately after the Napoleonic wars, Britain spent 80% of its revenues on debt service. They were about to take over the economic world. In the past, before the rise of the modern welfare state, it was considered perfectly normal for almost all public revenue to go to military purposes in wartime and debt service to retire wartime debts in peacetime. The entirely new factor these days is that everyone expects all government revenue to be available for transfer payments to the voters to buy their votes).

The debt is not remotely the issue, interest on it is tiny. The issue in public finances is entitlement spending and how little we actually get for it. People who lent capital to the government at least actually did something to receive that $250 billion a year. The people receiving 10 times that much in transfer payments mostly didn't. Some paid taxes which cover two thirds or so of their social security payments; for medicare it is more like one quarter.

There is no particular reason to be more concerned about $250 billion in interest paid to people who lent the government than the $2460 billion in transfers paid to people who maybe paid in a half that, at most. "But we don't get anything for the interest" - we don't get anything for any of the transfers. The bondholders do, just as medicare payees do, certainly.

Spending on things you do not need is waste. Paying very moderate interest on capital to have the use of that capital, isn't. Nothing about the low interest on the debt forced anyone to spend it on useless things. Focus the concern on the outgo, which is 10 times the problem and where all the waste actually occurs. "

Thu, 07/11/2013 - 23:23 | 3743926 NoDebt
NoDebt's picture

The debt and "entitlement" sprending are joined at the hip.  One basically causes the other.  Two sides of the same coin.

Napoleonic times.... I'm guessing, mind you, but I suspect that government spending on entitlements was effectively zero back then.  The big spending by governments was always on wars.  You ran a big government deficit on the war and (if you won) you paid it off afterwards.  That was true in the US through at least WWII and probably for some time after, as well.  Entitlement spending and debts went hand-in-hand beyond that point.

So, yeah, he's right, at a certain level.  But it's different times.  Comparisons to the past are largely irrelevant since "entitlements" started to wag the dog.  Now interest rates CAN kill us.  We can now, truly, do more damage to ourselves than any foreign power can do to us from outside.


Thu, 07/11/2013 - 23:24 | 3743928 kito
kito's picture

That guy is s retard. Govt pays about 3 percent on interest. When debt hits 23 trillion in 2017, and if rates normalized to 6 percent, govt would be servicing debt to the tune of a trillion a year. Debt to GDP will be near 140%. That's with revenue barely edging upwards due to near zero growth. That guy is a fucking retard. Did I already mention that?

Thu, 07/11/2013 - 23:25 | 3743930 Dr. Engali
Dr. Engali's picture

He argues against himself in his own post. He states that the welfare state and transfer payments which he is exactly right. The thing is those transfer payments aren't going away, they are only going to get much, much larger. He needs to do his math at more normalized rates( rates above the rate of inflation ) and he will quickly see that it completely blows up the federal budget.

Thu, 07/11/2013 - 23:34 | 3743954 fonzannoon
fonzannoon's picture

thanks for the responses. I will pool your collective thoughts and absolutely will end with retard.

Thu, 07/11/2013 - 23:49 | 3743964 Dr. Engali
Dr. Engali's picture

I forgot to mention that if rates go up the fed becomes effectively bankrupt since it could never sell a bond in the open market at anything less than a deep discount. Their only choice is to try a inflate the debt away and impoverishing millions of people doing so.

Thu, 07/11/2013 - 23:43 | 3743972 kito
kito's picture

Perhaps it never occurred to that douche that Bernanke has made it a priority to give mindless noobs no cause for concern about interest on the debt by slamming rates to near zero. Now why would the bernank go to all that trouble? Perhaps because rampant borrowing at much higher levels would flatten the u.s.?

Thu, 07/11/2013 - 23:40 | 3743958 Totentänzerlied
Totentänzerlied's picture

Wrong angle of attack.

Who cares if the .gov can make interest payments if it has to debase the currency to do so? Great job, cheesepopes, 95% of the world is back in abject poverty, but you successfully inflated away the debt, yay! The .gov can do whatever it likes with its worthless scrip, doesn't change the fact that the nation is 40 years into a brave new era of structural poverty with another massive leg down coming within a few years which will make the Great Depression seem like Good Friday.

They can play accounting games with their cheesepopebucks until their dicks rot off, it won't put more oil in the ground. Cheesepope watercarriers' livelihoods are dependent on their consistently and constantly missing the point, don't waste a breath on them.

The waste occurs at every level of everything everyone does, and has nothing to do with fiat.

Fri, 07/12/2013 - 07:56 | 3744431 artless
artless's picture

Umm, that would be cause that's the plan. Every time you vote, pay taxes, take on a 30yr for an over priced dwelling, car loan, student loan, buy "health insurance", pay property taxes, and everything else you buy in to that plan and endorse all its outcomes.

Any "crash" going forward will be just like every crash from the past. Those with "savings" will be destroyed and those who get the money first will be further empowered at the top of the heap. They will buy all the cheap shit at pennies on the dollar, wait a few years and then sell it back to the same fools (the general public who "invest" in things like 401K, pensions, etc) that lost it all a few years prior and not only take the massive profit but charge a giant service fee as well.

There is a word for it and it is SUCKER.

Fri, 07/12/2013 - 00:23 | 3744044 kareninca
kareninca's picture

wait a second  -  where are all your .........'s?

Is this really kito????

much better without the ........'s

Fri, 07/12/2013 - 08:07 | 3744453 Northeaster
Northeaster's picture

We're years away from that scenario.

EVERYTHING will be papered over, laws will continue to be usurped, and the majority of Americans are STILL none-the-wiser.

Meanwhile, the greatest rally of all time will continue thanks to The Fed and FASB-157. Parallel to this of course, is the largest transfer/theft of wealth in history. Americans will have to suffer far more before this charade ends.

Thu, 07/11/2013 - 22:39 | 3743805 Dr. Engali
Dr. Engali's picture

There will be a reset and there will be war. Thousands of years worth of history tells us that it is inevitable. The only question is when.

Fri, 07/12/2013 - 12:10 | 3745493 sgt_doom
sgt_doom's picture

SDShack stole my thunder, but as he mentions, real bankruptcies aren't taking place as they should have been, the super-rich are above that, as are their lackeys, which was why that bankruptcy bill passed in 2005, altering bankruptcies for the lower wage earners, with the amendment attached which stated that the bond holders get first dibs on all assets of they who don't earn enough and have to declare bankruptcy!

Thu, 07/11/2013 - 22:32 | 3743800 I Write Code
I Write Code's picture

until we go through the event horizon.

Aha, but then are you an optimist, or just a speculative physicist?  Cuz one never does go over the event horizon.  But here's the thang about that.  Bernanke has already gotten away with this all for years longer than any sober person would have thought, including Bernanke.  He got away with it in spite of, and perhaps because, it did NOT work as expected and goose inflation in 2008/2009.  Now, just mebbe, do you think it might be possible, and on closer inspection of actual history over the last four years - that the current fiscal regime is stable enough after all, to go one for a few more years?  Maybe that event horizon will stay just out of reach after all.

I could yammer on for a while about how and why this might be the case, but just tossing it out there for now.

Thu, 07/11/2013 - 23:42 | 3743969 akarc
akarc's picture

"Cuz one never does go over the event horizon."

"On a long enough timeline the survival rate for everyone drops to zero"

The question becomes, if one crosses the event horizon can they return to things as they were or are? If they can not, then we have already crossed over. 

Crossing the horizon is just the begining of the trip.

Thu, 07/11/2013 - 22:09 | 3743692 DormRoom
DormRoom's picture

America is broken.  The Beveridge curves shows it.  Structural unemployment for the long term unemployed (> 1 year).  For those unemployed less than one year, it's mainly part-time wage slavery.  The convergence is still apparent 4 years after QEx because interest rates are too blunt to solve mismatches in the job market. However, buying up Treasuries enables the cronyist government to do f**k all at tackling the root causes.  And the 1% trickle down wealth effect isn't going to solve the mismatch either.


Despite the linear gains in the equity markets, job growth has been relatively flat over the past 3 years. Hence, not a strong correlation between wealth effect, and the job market.


A consumer society is predicated on a Middle Class.  As the middle class disappears so too will American prosperity.



Thu, 07/11/2013 - 21:53 | 3743697 buzzsaw99
buzzsaw99's picture

wow was that a fun read. concise. flowing.

Thu, 07/11/2013 - 21:58 | 3743709 miker
miker's picture


Thu, 07/11/2013 - 22:00 | 3743712 miker
miker's picture

And as they now say in Japan:  "It can't be helped."

Thu, 07/11/2013 - 22:00 | 3743714 Yen Cross
Yen Cross's picture

     The only picture of Bernanke I want to see, is the one on a roll of toilet paper in a gas station.

Thu, 07/11/2013 - 22:01 | 3743721 slimething
slimething's picture

Record budget surplus, the Bernanke Bump record high, gold to $ is good, BTFD.

Thu, 07/11/2013 - 22:08 | 3743737 whopper
whopper's picture

I can't wait for this charade to blow !!!!!!!

Thu, 07/11/2013 - 22:14 | 3743753 slimething
slimething's picture

Jim Cramer says buy like it's a war! He's 100% Beranke fanboy now, falling all over himself about how great stocks are and cannot lose, but only win for investors. According to him NOW is the time to enter the market and ignore the cynical non-believers.



Thu, 07/11/2013 - 22:15 | 3743756 kito
kito's picture

This article should be printed and posted on every car....every utility pole....put in every mailbox....stockman tells it with simple straightforward clarity.....this is a must read for the sheeple....

Thu, 07/11/2013 - 23:07 | 3743893 sgorem
sgorem's picture


Thu, 07/11/2013 - 23:37 | 3743960 Notarocketscientist
Notarocketscientist's picture

I have emailed this to the sheeple at cnBS - specifically Joe Kiernen

Fri, 07/12/2013 - 00:00 | 3743996 Dr. Engali
Dr. Engali's picture

You wasted your time with that crew. First of all they are part of the propaganda machine, secondly the don't have the intellectual honesty to grasp this article. Too many big words for them.

Thu, 07/11/2013 - 22:16 | 3743760 Duc888
Duc888's picture

The FED works for the fukken FED.  Got it?


Don't expect them to help the unclean.


We are a resource to be bled.

Thu, 07/11/2013 - 22:16 | 3743763 khakuda
khakuda's picture

David Stockman is great. Being in the middle of his 700 page book, I have to say it is really good for those with the time. Respectfully, the guy could use an editor to get it down to a size that would be less daunting so more people would consider reading it. Getting through it is like reading Atlas Shrugged. Awesome read and a real service to believers in free markets.

Thu, 07/11/2013 - 22:17 | 3743765 Duc888
Duc888's picture

Cramer makes his living out of sucking FED cock.


Got it?


Thu, 07/11/2013 - 22:30 | 3743795 slimething
slimething's picture

That may be true, but apparently he likes it a lot. After all, isn't that what the economy is about, the stock market? He doesn't think too much of Rick Santelli, especially after this:

Thu, 07/11/2013 - 22:22 | 3743776 Jack Burton
Jack Burton's picture

The key point of his article is that all jobs are not created equal. People who are seeking a job know only too well what is really out there in the way of jobs. That Washington can produce these job growth figures and use them as evidence of recovery means nothing in reality. And most people under the 1% must live in reality. Now we know the 1% live in the Fed Money Printing Universe, they are far removed from reality. The money printing QE and ZIRP has flooded their sectors with free cash in the trillions, all they need do is find ways to harvest it. Not so for the no-connected who are seeking productive work. Just look around, the only good jobs going are in Health Care, Education and Government. Government includes the vast spy networks, police netwroks and military complex. These jobs pay top dollar, with the best benefits and retirements. EVeryone else is pretty much screwed. The sad thing is, that Education, Health Care and Government are almost wholly dependent on tax payers and money printers. In other words, they don't add any real productivity in the economy.

I see nothing to turn this around. For the majority of people it is not possible to compete with China and all the other low wage nations coming on line. They also now take more and more skilled level jobs, and that hits the middle class even harder.

Stockman is right, this whole thing is fake and a hoax. Max Keiser is right when he points out the fact that social instability is coming. The elites believe the new economy is set in stone, and that it can be enforced by the new police state. Perhaps so, but America would have to become one repressive gulag to keep the 90% in abject servitude and poverty while the TV blares the good life of the elites all over the media.

Thu, 07/11/2013 - 22:34 | 3743808 NoDebt
NoDebt's picture

What you've just described is called a Depression.  Just that the soup lines are now "hidden" by technology and willful blindness of reality.

One area I'll disagree is over the elites believing things are set is stone.  They believe no such thing.  They're just stacking it up and hiding it away all over the place (in absolutely brazen fashion).  They know more than the average guy in the street, this game is played-out.  They know the good and the bad will be swept aside equally (or at least randomly, without regard to the facts) so they steal and cheat with no regard to being caught.  Being "caught" won't matter much compared to what's coming down the tracks.


Thu, 07/11/2013 - 22:44 | 3743833 SDShack
SDShack's picture

Correct, the only thing TPTB fear is a French Revolution 2.0. It's why the NSA is spying on everyone. It's why the IRS is given power to extort money from everyone. It's why the DHS is stockpiling billions of rounds of ammunition. They know how bad it's going to get when it implodes, and they know they only way to survive is with the protection of a totalitarian police state. But even totalitarian police states eventually succumb to revolution. But not until millions die.

Thu, 07/11/2013 - 23:50 | 3743982 Totentänzerlied
Totentänzerlied's picture

Enough of these French Revolution analogies. The French Revolution was the French Civil War, the birth of socialism and international communism, and the bloodiest politicide/democide the world would see until the Russian Revolution. And it accomplished nothing but providing inspiration for the 20th century's bloodiest tyrants and their legions of apologists.


It was also the death-knell for classical liberalism and the Enlightenment social and moral philosophers. From then on everything degenerated into vile socialist-populist pabulum which culminated in Marxism-Leninism, and the rest is history.


I wish I could say I was surprised at the treatment given the French Civil War in schools, but I'm not, at all. Truly shameful.

Thu, 07/11/2013 - 22:50 | 3743848 slimething
slimething's picture

Like they say, perception is 90% of reality, and people are conditioned to gauge their prosperity by how well the stock market is doing, and the news, even if it is propaganda, the MSM decides to report. 

This is the Truman show, get used to it.

Thu, 07/11/2013 - 22:26 | 3743786 max2205
max2205's picture

Tick tick.....tock

Thu, 07/11/2013 - 22:27 | 3743789 I Write Code
I Write Code's picture

Great article maybe I didn't read the WHOLE thing but the basic point that there are major structural problems NOT to be fixed by any amount of fed printing, is bang on.

Did not realize all the fluff jobs lost since 2007 are the only ones since restored (and maybe even those are at lower real wages).

I just thought I'd take the opportunity to finally join the commenters here - and point out that both (sic) parties in Congress are working day and night to make it worse with the immigration bill, in particular importing more "educated" workers to fill the bread-winner jobs - THAT WE DON'T EVEN HAVE per your article.

These are crazy times.

Thu, 07/11/2013 - 22:36 | 3743818 Tourist2008
Tourist2008's picture

But its all going to be alright .... isn´t it?

Thu, 07/11/2013 - 22:45 | 3743840 Dr. Engali
Dr. Engali's picture it's not. Since Laws isn't around I'll say it for him.....hedge accordingly.

Fri, 07/12/2013 - 07:05 | 3744367 Notarocketscientist
Notarocketscientist's picture

Mother do you think they'll drop the bomb
Mother do you think they'll like the song
Mother do you think they'll try to break my balls
Ooooh aah, Mother should I build a wall
Mother should I run for president
Mother should I trust the government
Mother will they put me in the firing line
Ooooh aah, is it just a waste of time
Hush now baby, baby don't you cry
Mama's gonna make all of your
Nightmares come true
Mama's gonna put all of her fears into you
Mama's gonna keep you right here
Under her wing
She won't let you fly but she might let you sing
Mama will keep baby cosy and warm
Ooooh Babe Ooooh Babe Ooooh Babe
Of course Mama's gonna help build the wall

Mother do think she's good enough for me
Mother do think she's dangerous to me
Mother will she tear your little boy apart
Oooh aah, mother will she break my heart
Hush now baby, baby don't you cry
Mama's gonna check out all your girl friends for you
Mama won't let anyone dirty get through
Mama's gonna wait up till you get in
Mama will always find out where
You've been
Mamma's gonna keep baby healthy and clean
Ooooh Babe Ooooh Babe Ooooh Babe
You'll always be a baby to me
Mother, did it need to be so high.

Thu, 07/11/2013 - 22:51 | 3743853 Notarocketscientist
Notarocketscientist's picture

This article deserves to be in the ZH Hall of Fame.   Absolutely incredible analysis, from top to bottom, Mr Stockman.   

Thu, 07/11/2013 - 22:52 | 3743857 doggis
doggis's picture


Thu, 07/11/2013 - 22:58 | 3743870 WTFUD
WTFUD's picture

Great article! A must read for Benny the Bolt & Co.
Kito you had me going until your last line about the sheeple reading this. . . . if you stuck this on the back of every seat in every sports stadium or on the table in every bar 3% would get past the first paragraph.

Slightly off topic :-
Nothing beats the sound of a pigs jaw snapping!

Thu, 07/11/2013 - 23:17 | 3743911 sgorem
sgorem's picture

the sad outcome of this disaster is that the likes of bernanke, dimon, blankfein, and the thousands of other blood suckers will be the FIRST in the lifeboats as the USS American goes down with it's 401k's around their necks into the dark cold abyss of destitution.

Fri, 07/12/2013 - 08:07 | 3744452 artless
artless's picture

Yup. But you left out a few other notables.


Note how no matter what they do they never lose anything or go away. See the new dynamic duo Spitzer/Weiner. They get signatures, raise millions, then the sheeple line up and vote them into cushy jobs with enormous salaries and great bennies SO THAT THEY CAN RULE THE SHEEPLE AND FUCK EITH THEM AT WILL.

It is the equivilent of electing the fucking Mafia. Apparently Mencken was right when he said that Americans get the goverment they deserve and they get it good and hard.

So in the case of Spitzer just keep the visual of this criminal fucking you with his socks still on just like he did with the low rent whore from Jersey. Perhaps that might make the serfs wake the fuck up.

Fri, 07/12/2013 - 10:30 | 3744954 auntiesocial
auntiesocial's picture

to quote the Deciderer- "keep shopping"

Thu, 07/11/2013 - 23:23 | 3743927 casfoto
casfoto's picture

The meme is that things are great and if we publish it time after time after time that eventually the muppets will believe it and they will spend enough to take us out of the problem and into heavy cash.( Even though the people are broke).  The real thoughts of the market and the rich are... " we do not care if the statements are false" "we don't care if the unemployed are unemployed" "we don't give a shit about the people" ....the market does NOT care about the facts as long as we can control the amount of money that we can make. It is all about math. Get the people out of gold and get them into cash (India) (Europe) (US)...all that gold is doing is tying up cash and we NEED it to get our lifeblood going again. Consume. Spend. Buy junk...we do not care. But BUY.

Thu, 07/11/2013 - 23:28 | 3743942 Never One Roach
Never One Roach's picture

Record Banker Bonuses...what else matters?

Thu, 07/11/2013 - 23:42 | 3743968 Seal
Seal's picture

why not look at Social Security employment contributions as an index of job/employment numbers?

Thu, 07/11/2013 - 23:45 | 3743975 WTFUD
WTFUD's picture

After losing my job as a butchers assistant things got so bad for me that i was reduced to creeping around ladies toilets gather up their discarded tampons.
Once home i would sqeeze them out and make my own black pudding.
Tasted ok but the smell was overpowering so the secret was to rinse two out thoroughly and shove them up each nostril.

Thu, 07/11/2013 - 23:45 | 3743977 WTFUD
WTFUD's picture

After losing my job as a butchers assistant things got so bad for me that i was reduced to creeping around ladies toilets gather up their discarded tampons.
Once home i would sqeeze them out and make my own black pudding.
Tasted ok but the smell was overpowering so the secret was to rinse two out thoroughly and shove them up each nostril.

Thu, 07/11/2013 - 23:47 | 3743981 John Law Lives
John Law Lives's picture

Excellent article!

+1 for using modicum, apotheosis, simulacrum, insuperable, pettifoggery and somnolence in the text.

Thu, 07/11/2013 - 23:55 | 3743987 q99x2
q99x2's picture

Can't get on the right track until you take down the financial sector and restore the constitution. Washington is preparig to physically attack the United States of America. So everyone can see the direction things are going. It will not change without the help of military leaders that are still loyal to the United States of America and the Constitution vs. the banksters. They have to come forward and help the United States of America and live up to the oaths they have sworn to.

Fri, 07/12/2013 - 00:14 | 3744029 Stockmonger
Stockmonger's picture

The HES economy is about paying people to fill bed pans, and others to empty them.  This is called flow, and it makes us rich.

Fri, 07/12/2013 - 00:23 | 3744045 Tapeworm
Tapeworm's picture

I preordered Stockman's book when I first read an excerpt, so at least he gets some business from me.

 This essay, which I have not yet finished got me to give him a worthy five stars. Maybe I will start to read his book on this weekend where I can flop with few distractions.

 I am so jaded because I come from a manufacturing perspective that is so easily dismissed by the financial slimeballs that have destroyed this formerly productive nation.

Fri, 07/12/2013 - 01:26 | 3744116 Judge Crater
Judge Crater's picture

Maybe David Stockman could talk about something he is really associated with, the decision by the Reagan administration to tax Social Security benefits in 1981.  Hiding behind a blue ribbon commission headed by Alan Greenspan, the Reaganites for the first time imposed a tax on Social Security benefits.  For 30 years no one has changed the income threshholds to incur taxes. $25,000 in 1983 has the purchasing power of $50,491 in 2013 dollars.  In other words, the threshold earnings for Social Security taxes should have doubled, not remained the same.  Those taxes collected by the IRS on earnings of recipients of Social Security pensions are part of the budget.  Meanwhile, Reagan's Budget Director, David Stockman, went along with the massive tax cuts given to the wealthiest Americans, based on laughable Laffer trickle down economics.    


From Wikipedia: In 1981 the National Commission on Social Security Reform (sometimes referred to as the Greenspan Commission after its Chairman) was appointed by Congress and President Reagan to work on the financing crisis in Social Security. The result of their study included several amendments that were passed by Congress, signed by President Reagan and made into law in 1983. The specific rule applying to the taxation of Social Security benefits for the first time is copied below:

If the taxpayer's combined income (total of adjusted gross income, interest on tax-exempt bonds, and 50% of Social Security benefits and Tier I Railroad Retirement Benefits) exceeds a threshold amount ($25,000 for an individual, $32,000 for a married couple filing a joint return, and zero for a married person filing separately), the amount of benefits subject to income tax is the lesser of 50% of benefits or 50% of the excess of the taxpayer's combined income over the threshold amount. The additional income tax revenues resulting from this provision are transferred to the trust funds from which the corresponding benefits were paid. Effective for taxable years beginning after 1983.


Fri, 07/12/2013 - 08:23 | 3744475 artless
artless's picture

Once again misses the point. SS is a Ponzi scheme. Unless it is ENDED it will bankrupt the whole system. Reagan was just a political player. Give this and hopefully get that. The Gov needed revenue. Reagan raised revenue. Laugn all you want about the Laffer curve but it is proven true by empirical data. Revenue increased with lower marginal rates. This cannot be argued.

What is ignored as usual is the idea that the gov't "needs" the money. The more they TAKE from the private sector the less there is to actually elevate the standard of living and grow economies. So keep on complaining about how "the wealthiest Americans" got the tax breaks during Reagan and then again with Bush II but you are falling for the same bullshit everyone else does.

Two more points. My father's tax bill went down enormously after Reagan. The man never made even close to six figures EVER. And along those lines please tell me why anyone should pay any more in taxes than another? Somewhere I think I remember reading something about equal treatment under the law or dome such. Can you provide the ethical and moral basis for why a third party acting under the direction of a "majority" has the right to take by force (or coercion-same thing really) more property from one  individual than another?

Please do explain. I've been waiting for this one for a while.

Fri, 07/12/2013 - 03:08 | 3744234 Manic by Proxy
Manic by Proxy's picture

What do you mean, "will" be more reviled than Herbert Hoover?

Who is Herbert Hoover?


Please vote for your preferred response. All entries will be kept confidential unless a security agency decides otherwise.

Fri, 07/12/2013 - 04:41 | 3744296 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Ben Bernanke is a mere mouthpiece, a nothing, an illusion. He will meet his

Fri, 07/12/2013 - 07:10 | 3744374 kenezen
kenezen's picture

Great Article David! I've had recent chats with several International companies that relocated on this cycle back to the Americas to construct manufacturing and other businesses. The two primary responses as to why they went to Mexico (GE, GM, Honeywell, Goodrich and others) were two primary reasons. Taxes and Federal Agencies and their incredible imposition on time and money. EPA, NLRB and five others were most mentioned.

Fri, 07/12/2013 - 07:51 | 3744426 flight77
flight77's picture

Stockman at Kansas Library

Fri, 07/12/2013 - 08:27 | 3744483 MarcusAurelius
MarcusAurelius's picture

Stockman is correct. No doubt about it and hands down with his factual data. He misses one key point that I have said before. What is the alternative? A deflationary nightmare? I am sure just about everyone here was alive back in 1930 to know exactly what that feels like right?

     I was blessed to have a father and mother that were alive back then and lived through it. Tough does not begin to describe the conditions. It scarred them for life. They would not spend a dime more than they had to. Ever. I know we are a very spoiled and extravagent socieity. All that is required is a rebalancing act here over the next few decades so that others in the world can experience our wealth. Or perhaps we can let everything crash and of course everyone knows that we will recover just like iceland did. Oh yes...the icelanders have it all down pat. Icelands economy effects the whole world right. Give me a break.

       I am not saying that this way is the best because like the markets I will admit that I don't know. I am saying though that something to stave off a deflationary spiral that could conceivably last for decades or longer is NOT the way either. A climate devoid of risk or mal adjusted risk (call it what ever you wish) is still better than nothing at all. If you care for your childrens future then such a scenario would not be desirable. Things are bad enough for youth as it is. 

Fri, 07/12/2013 - 10:16 | 3744862 auntiesocial
auntiesocial's picture

This is scary stuff. You call 20K working / living? Furthermore, the great wealth transfer to those that have access to the 0% money are doing just fine. The BANKS ARE NOT LENDING BEN'S FRESHLY PRINTED STASH. Think about that. We are getting screwed. It really pisses me off that "they" really don't want a MAIN STREET RECOVERY.







Fri, 07/12/2013 - 11:34 | 3745302 Winston Smith 2009
Winston Smith 2009's picture

My local library has 12 copies of Stockman's book and all are checked out.  That's encouraging, but what we need is to take every Keynesian and force them to read his book like this: 

Do NOT follow this link or you will be banned from the site!