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"It's Not Too Late To Change Our Future, But Eventually It Will Be"

Tyler Durden's picture





 

Submitted by Lance Roberts of STA Wealth Management,

This past Friday the Bureau of Labor Statistics released the November jobs report which sent the mainstream analysts and economists into an ecstatic state as the numbers were substantially stronger than estimates.  However, in reality, the employment report continues to show that employment is being driven almost entirely by population growth rather than real economic strength.  I have discussed this previously stating:

"However, the reality is that, despite better than expected numbers in the report, employment gains to this point have been nothing more than a function of population growth.  The chart below shows the 12 month average of the net change in both employment and population.   As you can see, there have been very few months since the turn of the century where employment has exceeded population growth."

Employment-Population-120913

"This explains two things:

1) Why the employment to population ratio has plunged along with the labor force participation rate; and

2) That employment gains, so far, have been a function of businesses hiring only to meet the demand increases caused by an increase in population rather than from a growing economy.

The latter point is very important and relates directly to an issue that has been lurking silently in the background called 'labor hoarding.'"

Louis Woodhill reiterated this point recently in his column entitled "Curb Your Enthusiasm" stating:

"All that happened in November was that the labor market (as reported by the BLS Household Survey) made up most, but not all, of the ground that it lost in October. During the past two months, America moved 3,000 full-time-equivalent (FTE)* jobs farther away from full employment.

 

During those 61 days, our working age population increased by 399,000, but 265,000 Americans fled the labor force, continuing the unprecedented exodus from the world of work overseen by President Obama. While the "headline" (U-3) unemployment rate fell by 0.2 percentage points to 7.0%, the "true" unemployment rate, adjusted to the labor force participation rate of December 2008, rose from 10.9% to 11.0%.

 

President Obama's so-called 'economic recovery' is now 53 months old. During that time, America has moved 1.3 million FTE jobs farther away from full employment, the adjusted unemployment rate has increased from 9.7% to 11.0%, and real household income has fallen by 4.4%." 

The problem, as Woodhill so correctly states, is that the "real" economy is not growing and is only, at best, treading water.  While mainstream economists and analysts continue to jump on a monthly data point as a sure sign of economic recovery - the reality is quite different. 

The solution to solving this problem is something that I have addressed many times in the past when analyzing the monthly National Federation of Independent Small Business Survey which continues to point to government regulations, taxes and poor sales as the top three concerns of small businesses around the country.

"The uncertainty surrounding the economy that currently exists limits the ability for businesses to plan.  While the country can continue to run without a budget, as long as there is 'ink for the printing press,' small businesses do not have that luxury.  For businesses, their outlook is driven by those silly little economic factors like supply, demand and profits.  While it may currently seem to be a statement by businesses on the results of the election - it is more of an outlook on the future of the economy and how their personal livelihoods are going to be affected."

NFIB-Concern-Composite-120913

Importantly, Woodhill addresses this issue with his formula for a return to a strong economic America.

"So, what can the government do to encourage capital investment? Well, it can stop discouraging it. Here is the formula for prosperity:

 

Prosperity = Rule of Law + Economic Freedom + Stable Money + Low Tax Rates + Sane Regulations + Free Trade."

This formula, while not a revolutionary solution to solving the economic mystery, is simply a point of logic.  However, it clearly represents the detachment of the current Administration which has little real world experience, along with the bulk of the ivory tower academics advising them, from the issues impeding the economic recovery. However, as I stated previously:

"Business owners are some of the best allocators of capital and resources.  They spend money to increase production, expand facilities and hire employees to meet increasing demand.  They operate within the confines of the real economic environment, rather than theory, and the results of the recent election point to a tougher economic climate ahead.  Until there is improvement in the uncertainty that surrounds the economy, there is likely to be little headway that will be made in the months to come.  While further stimulative programs may boost asset markets in the near term it is unlikely that the engines of economic growth will kick in until debt levels are reduced, tax policies are clarified and the regulatory environment is cleared."

Woodhill's formula reiterates what small business owners across this country have been clamoring for over the past five years.  Business owners inherently want to grow, employ more people and achieve greater profitability which in turn creates economic growth.  It is simply in their best interest to do so.  However, the current Administration continues to intervene with more regulations, threats of higher taxes, increased costs and uncertainty about the economic future.  Subsequently, business owners continue to fight back against the current fiscal and monetary policy makeup by reducing costs, increasing productivity and suppressing employment and wage growth.  As Niall Ferguson noted:

"23 years ago the world seemed much simpler. Francis Fukuyama wrote that the West had won the war of Capitalism. However, 23 years later things have changed. By 2016, the economy of China will exceed that of the U.S. This is not what Fukuyama expected in 1989. It should not be possible that a communistic society could poised to overtake a capitalistic economy. It is quite an amazing turn of events.

 

The explosion of public debt in Western economies is a symptom of the more profound economic malaise. The argument between stimulus and austerity is very futile. The reality is that by 2050 interest payments on government debt will be above 100% of federal revenues; according to the Alternative Fiscal Scenario (AFS) of the CBO. The AFS are the more realistic of the two assumptions that the CBO produces.

 

There were '6 Killer Apps' that defined the U.S. during its great economic growth cycle - Competition, Scientific Revolution, Modern Medicine, Consumer Society, Work Ethic and Property Rights

 

Those issues allowed for growth, innovation and rising economic prosperity during the 20th century. Today, while the rest of the world has slowly been adopting these 'killer apps' the U.S. is slowly losing them.

 

A critical point is the Rule of Law. In order to have a strong, and prosperous, economic environment the participants in the system must be able to rely on a stable and fair legal system. In the U.S., the rule of law has been under continuous attack over the last 30 years. The decline in the rule of law has been evident in the shift of prosperity in the U.S. economy. If you look at 15 different measures of the rule of law, as they exist in countries all around the world today, unfortunately the U.S. does not rank at the top it any category. However, Hong Kong beats the US on every single rule of law and ranks in the top levels on every single measure.

The problem is that the U.S. has a 'rule of lawyers'. As an example 'Dodd-Frank' is the largest single employment scheme for lawyers in the history of the U.S.  However, when it comes to the private sector, which has to live with the implications of the bill, it massively increases costs, reduces competition and impacts future prosperity."

The long term implications of these secular shifts are crucially important to the future of everything from investing, to living and the future of our economy.  It is not too late to change our future, but it eventually will be if we do not begin to make changes soon.

 


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Thu, 12/12/2013 - 18:37 | Link to Comment ZerOhead
ZerOhead's picture

< Obama

< a dead goat

I forgot the question I was going to ask...

Thu, 12/12/2013 - 18:40 | Link to Comment negative rates
negative rates's picture

We make up false premises around here and just run wit it, consequences bitches.

Thu, 12/12/2013 - 18:42 | Link to Comment ZerOhead
ZerOhead's picture

     Oh right...

Who would you rather have your friends see you driving around town with?

Fri, 12/13/2013 - 09:45 | Link to Comment Seer
Seer's picture

Man!  Life just ain't black and white!

Suppos'n my friends are all goats?

Thu, 12/12/2013 - 18:55 | Link to Comment Pseudonymous
Pseudonymous's picture

"Which one's health insurance is better"?

Thu, 12/12/2013 - 18:41 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Jobs versus population growth?  really?  Nature and the laws of physics are what they are on this planet of very finite resources.  They will back only one "winner" is this debate, you know where my money is...

same as it ever was...

Thu, 12/12/2013 - 18:53 | Link to Comment El Vaquero
El Vaquero's picture

 

you know where my money is...

Rollable guillotines, lead and share cropping?

Thu, 12/12/2013 - 18:46 | Link to Comment ebworthen
ebworthen's picture

Too late.

Look at the debt and unfunded liabilities.

Look at the aging population and sinking labor participation rate.

Look at the income gap, unaffordable healthcare, and unchecked immigration.

Something is going to have to give and history shows it is usually people's lives.

Thu, 12/12/2013 - 20:33 | Link to Comment Chuck Walla
Chuck Walla's picture

Something is going to have to give and history shows it is usually people's lives.

That's because its the easiest variable to control. One shot, one kill. Tequila!

FORWARD STALIN!

Thu, 12/12/2013 - 18:55 | Link to Comment NIHILIST CIPHER
NIHILIST CIPHER's picture

Unemployment lower ?????????????   WTF WTF WTF I  am so fed up reading this crap from MSM.  

 

They can spoon feed this tripe to the masses but some of us just don't want to eat this LIE.

 

Fri, 12/13/2013 - 04:28 | Link to Comment Seer
Seer's picture

Sadly, what are the "masses" to do?  They could rise up and take the controls, but it's the same grow-or-die System that's running on fumes...

Thu, 12/12/2013 - 19:01 | Link to Comment kito
kito's picture
"It's Not Too Late To Change Our Future, But Eventually It Will Be"

 

i am tired of hearing this naive optimistic crap already.  its natures laws that will be doing the changing and there isnt anything humans can do about. they have been trying to do something about it. they have been printing oodles of money, and borrowing, and bullshitting the public because they know there is only so long the tide can be held back. the humans running the show believe they can avoid the ebb and flow of the universe, the creation/destruction process that is required for life to go on. its going to happen folks, because it HAS to happen. it NEEDS to happen. 

Thu, 12/12/2013 - 20:24 | Link to Comment itstippy
itstippy's picture

A temporary and targeted monetary stimulus operation by the Federal Reserve will jumpstart the nascent recovery and get us out of this stubborn economic rough patch.  You see, the Federal Reserve has many unconventional tools available that it can deploy as needed to provide needed liquidity and . . .

Ah, fuck it - you're right.

Thu, 12/12/2013 - 22:43 | Link to Comment BringOnTheAsteroid
BringOnTheAsteroid's picture

You sir, are a terrorist.

Fri, 12/13/2013 - 04:28 | Link to Comment Seer
Seer's picture

"the humans running the show believe they can avoid the ebb and flow of the universe, the creation/destruction process that is required for life to go on."

kito, I believe that they realize that they've got no other choice than to do what all the rest of us do.  Summed up best by this quote:

"The secret plan is that we're going to keep doing exactly what we've been doing, for as long as we can."

- Daniel Quinn, in, "What a Way To Go"

The ONLY option is to come up with some self-regulating "design," but that would require some forced restraints on population sizes.  Should be pretty clear that there's no way in hell that this would be adopted world-wide.  So, it'll be left up to "God"/"Mother Nature" to do it for us; and, I think that it's probably best that way, else we have to turn ugly on one-another and become what we've always tried to avoid/distance ourselves from being- "animals."

Fri, 12/13/2013 - 10:24 | Link to Comment Milestones
Milestones's picture

See my Joan of Arc comment above. May future generations (optomistic) will refer to our era as the "Bondfire of the (sociopathic) Vanities" and our contribution to the rising global temperature. Burn Baby!!!          Milestones

 

 

 

Thu, 12/12/2013 - 19:01 | Link to Comment no life
no life's picture

Why hire if you can simply plunk the same funds into an etrade account, rinse repeat as the Fed prints more and more cash. A monkey could play this market.

Thu, 12/12/2013 - 19:44 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Nice chirp by the author and the Niall Ferguson ref is a plus, but without mentioning Fed QE thin air printing and the invasion of illegal aliens... to speak of US jobs, trends, and price levels for capital versus "labor" is just blather....

Thu, 12/12/2013 - 19:46 | Link to Comment q99x2
q99x2's picture

It is never too late to change the future unless you are not willing to fight for it. Look what WWII did for us. 

Thu, 12/12/2013 - 20:17 | Link to Comment falak pema
falak pema's picture

Fukuyama...lol, when he wrote his book as follow up to Wolfowtiz Doctrine/Bush Snr NWO speech and Iraq invasion, the world was free of all geopolitical threats.

Anybody who can write such a naive book is asking for Nemesis to visit the world.

Two years later we had Clash of Civilizations and the MIC had its bogey man in its sights : The islamic terrorist all fabricated in Afghan by CIA to fight USSR. 

Operation Desert storm hubris on "sacred soil" and Ben Laden was born. Afghan walk away and Taliban took over like programmed robots from CIA contra type pschopaths inc factory. 

Meanwhile back in the USA we were in operation NWO outsource, dot com spike and ZIRP funding new derivative sauce.

Nemesis had her work cut out and Fukuyama's ghost reappeared twenty years later like phantom of Fukushima. 

Once a Fuku always a fuk-u; thats Nemesis. And the world was lost in hubris.

Thu, 12/12/2013 - 20:32 | Link to Comment suicidalpsychologist
suicidalpsychologist's picture

please, humans are animals and all life forms are programmed to defend themselves at the expense of other life forms, as a result we will indeed destroy ourselves, the planet, or another planet after colonizing it, it cannot be otherwise, thats just life; life kills, life is war , life is struggling for survival until you can reproduce , then you teach your strategies of survival to your offspring and you disapear. OH and btw if we dont destroy everything some random "natural" cataclysm will anyway.

Thu, 12/12/2013 - 21:08 | Link to Comment Being Free
Being Free's picture

Had to up you...thanks for making me feel like an optomist.

Fri, 12/13/2013 - 01:56 | Link to Comment suicidalpsychologist
suicidalpsychologist's picture

well there s a reason why we invented jobs, sport, porn, video games , art, music etc. To forget about the truth, to stay busy, occupied. We definitely are funny animals who spend their lives pretending they re not animals only to realize in their last breath they indeed, are.

 

dinosaurs , as dumb as they were, lasted way, way way longer than we probably will. Just because we "evolve" fast doesnt mean we re going to last long. And just because we exist doesnt mean we have a purpose. Our only purpose is to insure our own survival, just like any other kind of life form that exists in the universe.

Fri, 12/13/2013 - 04:19 | Link to Comment Seer
Seer's picture

Will you be my friend?

With this view (which is correct) I find it hard to make friends...

We are, like all life forms, programmed to reproduce.  Go forth and multiply: on a finite planet/environment this is kind of a design flaw.

BTW - Five up-arrows and no down-arrows.  WAAY back when I'd started here on ZH making such statements wouldn't have been accepted: I struggled early on to get this point across (only a couple of other folks seemed to understand).

Thu, 12/12/2013 - 23:01 | Link to Comment Randoom Thought
Randoom Thought's picture

When did ZH go all Commie Progressive on us? The Commie Progressives tell lies disguised made to look like utopian truths. It is an Alinsky style deception.

Fri, 12/13/2013 - 04:16 | Link to Comment Seer
Seer's picture

"When did ZH go all Commie Progressive on us?"

When you were sleeping.

Thanks for your very important "randoom thought."

Fri, 12/13/2013 - 01:24 | Link to Comment Flammonde
Flammonde's picture

Too late?  Surely it was quite late, no doubt dawn of the day it was too late, when Alden Pyle's body washed up under a bridge in Saigon.  It was a very late hour for Joe Bonham in World War I when he gradually realizes that he has lost his arms, legs, and all of his face (including his eyes, ears, teeth, and tongue), but that his mind functions perfectly, leaving him a prisoner in his own body.  Yes and I bet the clock struck midnight when Eighteen-year-old Private Henry Fleming cut and run from the Confederates.  Thus it is in the world, "Corso e Ricorso.”  For Vico, history unfolds in a series of cycles, each with three eras.   The driving force of this progressive development of history is class struggle and status inequities.   This is one of the first evolutionary theories of historical progression, pre-dating Marx, Darwin and Hegel.   Even human nature develops, and human ends and interests are social as well as individual products.  Essentially each era starts with imagination and superstition, moves towards rational and orderly thought, and then descends again into imagination.  Politically this goes from anarchy to oligarchy, to monarchy and democracy, and then a decline back to anarchy. .


Fri, 12/13/2013 - 09:43 | Link to Comment Seer
Seer's picture

"decline back to anarchy"

That's pretty biased is it not?  A "decline?"

Really, if things are circular then how is there really a top or a bottom?  Circles like to roll a lot...

Entropy promotes anarchy.  Anarchy is only held back by the introduction/inclusion of non-typical levels of energy.  Sometimes there just ain't enough energy available to push back all that we wish to push back... got nothing to do with "negative" or "positive" (well, unless we're getting down to talking about electrons and such).

Fri, 12/13/2013 - 04:07 | Link to Comment Seer
Seer's picture

"This formula, while not a revolutionary solution to solving the economic mystery, is simply a point of logic."

That "formula" doesn't have anything to do with the REAL PHYSICAL WORLD!  Where the fuck is Natural Capital?

Here's the "equation:"

ourfiniteworld.com/2013/12/06/diminishing-returns-energy-return-on-energy-invested-and-collapse/

"However, it clearly represents the detachment of the current Administration which has little real world experience"

Pot calling the kettle black, ignorant fucks.

Fri, 12/13/2013 - 09:09 | Link to Comment enloe creek
enloe creek's picture

didn't people live on potatoes almost exclusively until all the potatoes failed because everyone planted the same strain as it produced the most results
now everyone is doing it again being all monoculture about life. Mfu kin should go all amish or something I guess
except for the non violence thingy of course

Fri, 12/13/2013 - 10:27 | Link to Comment Marco
Marco's picture

"Prosperity = Rule of Law + Economic Freedom + Stable Money + Low Tax Rates + Sane Regulations + Free Trade."

You missed two prerequisites, low rents and natural capital as Seer points out. Unfortunately there is no more land to homestead.

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