This page has been archived and commenting is disabled.

Jon Hilsenrath Is Scratching His (And The NY Fed's) Head Over The Job Number Discrepancy And Okun's Law

Tyler Durden's picture


A month ago Zero Hedge, based on some Goldman observations, asked a simple question: is Okun's law now terminally broken? Today, with about a one month delay, the mouthpiece of the New York Fed (which in itself is nothing but a Goldman den of central planners, and Bill Dudley and Jan Hatzius are drinking buddies), Jon Hilsenrath shows that this is just the issue bothering his FRBNY overseers. In an article in the WSJ he ruminates: "Something about the U.S. economy isn't adding up. At 8.3%, the unemployment rate has fallen 0.7 percentage point from a year earlier and is down 1.7 percentage points from a peak of 10% in October 2009. Many other measures of the job market are improving. Companies have expanded payrolls by more than 200,000 a month for the past three months, according to Labor Department data. And the number of people filing claims for government unemployment benefits has fallen. Yet the economy is barely growing. Many economists in the past few weeks have again reduced their estimates of growth. The economy by many estimates is on track to grow at an annual rate of less than 2% in the first three months of 2012. The economy expanded just 1.7% last year. And since the final months of 2009, when unemployment peaked, the economy has expanded at a pretty paltry 2.5% annual rate." Hilsenrath's rhetorical straw man: "How can an economy that is growing so slowly produce such big declines in unemployment?" The answer is simple Jon, and is another one we provided a month ago - basically the US is now effectively "printing" jobs by releasing more and more seasonally adjusted payrolls into the open, which however pay progressively less and less (see A "Quality Assessment" Of US Jobs Reveals The Ugliest Picture Yet). After all, what the media always forgets is that there is a quantity and quality component to jobs. The only one that matters in an election year, however, is the former.  As for whether Okun's law is broken, we suggest that the New York Fed looks in the mirror on that one.

As for the rest, here is a guest post from early February that went over all the "outstanding" issues on Okun.

Submitted by Jeff Snider, President & CIO, Atlantic Capital Management

It's Far Deeper Than Broken Okun

ZeroHedge’s post on the apparent breakdown of Okun’s “Law” ( highlights the ongoing tragicomedy of how the science of central economic planning eventually confounds, and then consumes itself.  Economics is, after all, a social “science”, an elaborate study of human beings and, most importantly, human interactions.  Robert Okun, for his part, merely observed in 1962 that when “output” (whatever statistical measure is en vogue) rises by 3%, the unemployment rate seems to fall by 1%.  For some reason, economics assumes that if it is true in the past, it will be true forever, so it was written into the canon of orthodox economic practice.

Economics has inferred causation into that relationship, giving it a layer of permanence that may not be warranted.  Econometrics has always had this inherent flaw.  The science of modern economics makes assumptions based on certain data, and then extrapolates them as if these assumptions will always and everywhere be valid.  There is this non-trivial postulation that correlation equals causation.  In the case of Okun’s Law, it seems fully logical that there might be causation since it makes intuitive sense – more economic activity should probably lead to more jobs, and vice versa.  But to assume a two-variable approach to something that should be far more complex is more than just dangerous, it is unscientific. 

In fact, Okun’s Law has already been adjusted somewhat, most famously by Ben Bernanke and Andrew Abel in their 1991 book.  It was upgraded to a 2% change in output corresponding with a 1% inverse change in unemployment.  Apparently with the economic “success” of that period, Okun needed a re-calibration.

Any such academic exercise means a careful review and study of the time series of economic data.  Most of these academic papers focus on finding a new regression or other statistical relationship that better “fits” erstwhile independent variables into each other’s gravity.  As it was with Bernanke and Abel, Okun’s law in 2000, updated by the new data set of the Great “Moderation”, needed to harmonize with the new data series of the 1980’s.  Bernanke and Abel were not disagreeing with Okun, rather they were measuring some of the additional complexity that goes into the relationship between output and employment.

The academic sense of understanding the economy requires ceteris paribus.  In order to make econometric models manageable and statistically meaningful, complexity has to be trimmed and managed.  It is far easier to incorporate simple relationships that appear to work over specific periods of time than to try to estimate the massive and dynamic complexity that the real world exhibits.  The grand mistake of economics is this sense of permanent simplicity.

In terms of broken Okun, simplicity has meant that it only measures the quantity of jobs.  Okun’s practitioners assume, ceteris paribus, that a new job is a near-perfect substitute for an existing job (or a lost job from the current dislocation).  In the case of job growth since the recession trough in 2010, though, “new normal” jobs are not perfect substitutes for lost bubble/artificial jobs.  Newly created employment just does not produce the same wage income as the previous bubble paradigm (a lot of this disparity can be seen by the greater proportion of part-time jobs, far more than economic models predict).

This complexity and nuance extends even beyond wage income.  A job in the preceding artificial period also meant easy access to cheap credit money.  So job growth during the twenty plus years previous to 2007 meant both wages and available credit money (NINJA were not marginally significant until the very late bubble period).  New jobs in 2010, 2011, or 2012 (and likely beyond) not only produce less wage income, there is no additional boost through credit, and therefore less marginal economic activity per new job unit.  So numerically, the number of jobs, unqualified by any additional measurements, has grown without living up to the expected output growth (of course there are other factors as well, especially the negative effects of ZIRP on savers and the corporate preference for financial innovation over productive innovation, as well as the negative effects of commodity prices acting out central bank inflation expectations, but those would mean that money itself has changed in terms of how it relates to the economy – the academic sense of velocity – which should lead to all sorts of soul searching among monetary policy planners).  On an apples-to-apples basis, new employment simply does not and cannot match the artificial boost of the preceding period, so a simple number quantification is less than useful.  

Instead of questioning these simplified relationships and laws, mainstream economics attempts to explain all of this through a hugely negative output gap (in other words, the theories are correct, the results are flawed).  Believing that past relationships still hold on largely untransformed terms, they believe that the economy should be growing much faster than it has.  To make up that massive gap, the Fed embarks upon its real dual mission of making sure no large credit creators ever fail (money elasticity) while pushing investors into “risk” (and out of the supposed paradox of thrift) by making safety or saving expensive.  The Fed keeps banging its head against the wall, trying greater and more costly interventions all in the vain attempt to close the theoretical output gap that does not really exist (results over theory).  If economics would see that the previous paradigm of leveraged wage income is what is permanently broken (along with economic circulation through asset inflation, commonly known as the wealth effect), it might be able to conclude that the Great Moderation was really nothing more than artificial growth that won’t be returning.  Then punishing the economy through intervention might be seen as counterproductive as it has really been.

If that artificial paradigm is now past tense, then so many of the “laws” upon which the social science of economics rests should also be rethought.  This is particularly true since mainstream economics (especially econometrics) “grew up” during the Great Inflation and Great “Moderation” – the very periods of over-active central banking and credit production.  Just because a relationship held during that specific time period does not mean it should then be extrapolated through all time.  Economics is not physics, what seems to hold today may not hold tomorrow (this should be very apparent when a theory or set of beliefs fails to exhibit predictive ability).  The real economic world is one marked by dynamic processes that are not well understood by academic theories wedded to their elegant, but ultimately static, mathematical constructions.  Structured finance and securitizations, as an example, worked extremely well under static assumptions (such as real estate prices only move in one direction), but once the dynamic world moved beyond statistically assumed financial tolerances it was a total disaster.  The paradigm shifted but the theories and causal assumptions did not until after it was all over – again, not a very scientific result.

Economics should be undergoing a more rigorous examination of its philosophical bonafides, especially since it has shown very little predictive capacity (hard science needs to be both predictive and replicable, a standard economics has not, nor will ever, meet).  The foundations of mainstream economic thought should be shuddering at the prospect of being so wrong so often.  Every assumption and relationship should be re-evaluated as to whether it was really true in the universal, timeless sense, or whether it was simply captured by a specific pattern in a defined and limited data series (such as the over-worn trope that low interest rates are always stimulative).

For impartial observers, there was a rather clear demarcation between the “new normal” of this recovery and the artificial bubble period, turbo-charged by trillions in securitized debt, that preceded it.  Okun’s law is not broken, it was simply never a law or rule of thumb to begin with.  Bernanke and Abel were probably correct that a 2% output change led to a 1% inverse change in unemployment at the time they wrote their book.  The hubristic mistake of modern economics is believing Okun, and every other economic law, to be a universal property of all economic systems at all times.  The world is more complex than that, and capable of changing in ways that cannot be oversimplified.  Sometimes correlations are coincident to larger interactions and patterns, and not causation at all.

Real estate prices do, in fact, go down as well as up.  Low interest rates do not always stimulate economic activity.  Most importantly, economic potential is not simply a measure of economic output from 2003-2007.  Every economic and monetary intervention (all that ails this current economic age) flows from this mistake of oversimplification and pattern bias.  There would be no need to punish savers.  There would be no special place afforded to the oversized behemoths of credit production and finance.  Hell, there would be no place for the overgrown financial economy to begin with if economists would admit that the world does not easily fit within the Garbage In Garbage Out confines of mathematically modeled oversimplifications. 

The biggest simplifying mistake in economic history was believing that a centrally planned, debt-based economy was a near-perfect substitute for a real capitalist economy, working bottom-up through unfettered price discovery, that values real production.  That such soft central planning apparently worked during the Great Moderation is nothing more than pattern bias, a flawed theory captured by a unique data set of oversimplified variable relationships.  The fact that it is all breaking down now is solid evidence of that paradigm shift, an invalidation of previous assumed causal relationships, not some ephemeral headwinds. 

Economics is really nothing more than opinionated interpretations and analysis.  But this kind of subjectivity does not jibe with central planning.  Economic control is much easier to accomplish if it is conducted under the veneer of objectivity and science, especially when your marginal goal is historic impoverishment through debt.  Although, that might be too harsh for most economists since they simply believed their own theories, including the idea that the marginal pace setter of artificial economic activity, asset price inflation, only moves in one direction.  Their scientific observations of the Great “Moderation” told them so, and so they remained captured by their own work.  The fact that an entire asset class had collapsed during all that moderation should have been a huge and unmistakable warning to economists to truly observe and learn the dangers of extrapolation and the short-comings of trying to create a science out of pattern bias and oversimplification before deliberately charting a course for historic impoverishment.  But even that oversimplifies what might really be the problem here – that modern economics is not only not a science, it is an ideology.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 03/12/2012 - 08:48 | 2246820 GetZeeGold
GetZeeGold's picture



Let me help you was BS.


Just slap some numbers together and publish.....just make sure this number is lower and it's all good.


Mon, 03/12/2012 - 08:51 | 2246830 King_of_simpletons
King_of_simpletons's picture

In the land of fakery, superficiality and magic numbers nothing will make sense. Once can go bald scratching the head. It's best to sit back and enjoy the train wreck in real time.

Mon, 03/12/2012 - 08:53 | 2246835 resurger
resurger's picture


Mon, 03/12/2012 - 08:55 | 2246840 battle axe
battle axe's picture

I would say it looks like a comedy of errors, but it is just a tragedy with out end. 

Mon, 03/12/2012 - 09:01 | 2246852 resurger
resurger's picture

it will come to an end battle, be patient we are enjoying this sleazy farce..

Poor Charles Biderman, lol!

Mon, 03/12/2012 - 09:32 | 2246909 economics1996
economics1996's picture


Mon, 03/12/2012 - 09:34 | 2246914 Badabing
Badabing's picture

It’s the new day and age of fake numbers and I am complying with my avatar.

Have they fudged the income tax numbers yet?

1913 to 2011 nice drop off they must think we be dicks!


Mon, 03/12/2012 - 09:43 | 2246935 economics1996
economics1996's picture

Taxes are not as important as actual government consumption of resources.  The top tax rate can be 90% like in the 50s but if the federal government consumes 16% of the GDP, 24% today, then the economy will perform much better.

Mon, 03/12/2012 - 09:45 | 2246941 economics1996
economics1996's picture

Economics taught in high school, college, and grad school is nothing more than propaganda supporting the federal government and Federal Reserve.  Pure bull shit that needs to be thrown out.

Mon, 03/12/2012 - 10:00 | 2246983 Thamesford
Thamesford's picture

Scary commentary in the FT today! Let's retire the debt with printed money!

Mon, 03/12/2012 - 10:38 | 2247109 Badabing
Badabing's picture


Federal income tax collection reflects how many jobs are paying into the system.

The BLS only counts the unemployment benefits, if less people are out of work than the tax collected should go up. BUT NO it’s going down because the people “not” being counted as unemployed and are unemployed don’t pay an income tax.  

Mon, 03/12/2012 - 09:37 | 2246922 economics1996
economics1996's picture

Translation, unless everything stays the same the economic models are not worth a crap. 

The big difference between the early 60s is that the federal, state, and local government consumption as a percent of the GDP was about 26%.  Today that number is 45%.

Government is a drain on the economy, wasted useless misallocation of resources.  Simply put in 1960 more money was going into the productive private sector creating productive, renewable jobs.

Mon, 03/12/2012 - 09:49 | 2246947 WonderDawg
WonderDawg's picture

Exactly. In the econ classes I took in college, they used the term "ceterus peribus", meaning all things being equal. The problem is, the real world isn't static, so the models are pretty much useless with regard to predictive ability.

Mon, 03/12/2012 - 11:11 | 2247210 Woodyg
Woodyg's picture

Its not a tragedy - it's a drinking song:

Wasting way again in Obamaville
looking for that last good paying job
Some people say that there's a poor man to blame
But I know it's a central banksters fault.......

Mon, 03/12/2012 - 09:49 | 2246951 lincolnsteffens
lincolnsteffens's picture

Please be more concise with your analysis. You tend to ramble on quite a bit.

Mon, 03/12/2012 - 10:28 | 2247067 Problem Is
Problem Is's picture

"Once can go bald scratching the head"

Do you think that is what happened to Cue-Bald Bennie The Bernank???

Mon, 03/12/2012 - 09:01 | 2246854 Jefferson
Jefferson's picture

In college, I puked a gallon of vomit for every quart of tequila I chugged. Does that mean I can be a Noble prize winning economist?

Mon, 03/12/2012 - 09:38 | 2246926 economics1996
economics1996's picture

Yes as long as you believe in fairy tales.

Mon, 03/12/2012 - 09:50 | 2246957 Jefferson
Jefferson's picture

Sometimes I believe in as many as six impossible things before breakfast. Where's my prize money?

Mon, 03/12/2012 - 09:04 | 2246859 SheepDog-One
SheepDog-One's picture

GOLDEN SLACKS the crooks who ran the '08 market collapse for their own benefit now are scratching their heads wonderin 'Sumpin just dont add up here with economic numbers'?

Oh give me a break.

Mon, 03/12/2012 - 09:31 | 2246907 kito
kito's picture

yeah, exactly what is the point of their pathetic charade?......

Mon, 03/12/2012 - 10:11 | 2247007 Antifaschistische
Antifaschistische's picture
, where
  • is past GDP
  • is actual output
  • is the natural rate of unemployment
  • is actual unemployment rate
  • is the factor relating changes in unemployment to changes in output

from Wikipedia.

Here's what I see, or don't see.

 is just a body count...while Y is is measured in USDollars.  Unless there's an adjustment for the value of the dollar then this formula will not work. 

Mon, 03/12/2012 - 08:48 | 2246825 t_kAyk
t_kAyk's picture


Mon, 03/12/2012 - 08:48 | 2246826 Momauguin Joe
Momauguin Joe's picture

What I'd like to know is who are the top 30 shareholders of the FRBNY.

Mon, 03/12/2012 - 09:22 | 2246885 WonderDawg
WonderDawg's picture

The information is out there if you dig a little. Here's one place to start:


Mon, 03/12/2012 - 08:50 | 2246827 the not so migh...
the not so mighty maximiza's picture

They are running into a problem.  No cook booking can overcome the reality people see.



Mon, 03/12/2012 - 08:55 | 2246839 resurger
resurger's picture

the dam is cracking up

Mon, 03/12/2012 - 09:05 | 2246862 SheepDog-One
SheepDog-One's picture

Thats how I see it, theyve cried wolf too many times no ones buyin it anymore. 

Mon, 03/12/2012 - 09:31 | 2246908 kridkrid
kridkrid's picture

I think you're overestimating people.  People are buying it, in general.  Even if their situation isn't improving, they assume that they are the exception in the face of "positive economic data".  Just my limited observation.

Mon, 03/12/2012 - 08:50 | 2246828 Flakmeister
Flakmeister's picture

Law of Diminishing Marginal Returns is more like the reason....

Mon, 03/12/2012 - 08:52 | 2246832 espirit
espirit's picture

Really common sense prevails here.  The Govt "pays" for those numbers, and a provider knows which side of the bread has butter.

Hell, I wouldn't doubt the numbers get better until everyone is unemployed in Bizzarro World.

Mon, 03/12/2012 - 09:15 | 2246871 SheepDog-One
SheepDog-One's picture

Their problem now seems to be one of thinking they can fool all of the people all of the time. 

Bunch of egghead PHD's who think whatever they say will be believed always, no matter how ridiculous and against reality it is.

Mon, 03/12/2012 - 09:40 | 2246927 LawsofPhysics
LawsofPhysics's picture

Long black markets.

Mon, 03/12/2012 - 08:52 | 2246833 alexwest
alexwest's picture

Robert Okun, for his part, merely observed in 1962 that when “output” (whatever statistical measure is en vogue) rises by 3%, the unemployment rate seems to fall by 1%. For some reason, economics assumes that if it is true in the past, it will be true forever, so it was written into the canon of orthodox economic practice.

I wonder do those idiots understand that THERE'S NO FUCKING RECOVERY IN USA..

for last 4 years USA fed gov spent 8-10% of GDP of additional money.. its not the growth.. it jsut printed money ,,

idiots who come w/ GDP formula somehow put 'GOV spending' in equitation. from GDP standpoint it doesnt matter where GOV gets money : taxes(aka real economy) or printed $$$.. well.. its s theory .. in real world it DOES MATTER..

last figure: during deep deep Great Depression BIDGET DEFICIT was never biger than 5% of GDP (excl WW2).. so you do understand why there's no real growth..?


Mon, 03/12/2012 - 08:53 | 2246834 mick_richfield
mick_richfield's picture

Whom the gods would destroy, they first make to believe their own bullshit.

Mon, 03/12/2012 - 08:54 | 2246836 Dre4dwolf
Dre4dwolf's picture

GDP grows because of Government spending.

Unemployment falls because they stop counting people who have either died from starvation or given up looking for a job.


GDP growing in its current fasion is of almost no benefit to the average america, this "growth" only helps corporations and share holders of the federal reserve.


GDP calculation needs to be adjusted to negate / remove government spending from the equation so that you can see a clear picture of the economy.


I suspect that if you re-calculated GDP to remove Govt spending (which lets face it ... is wasted money akin to building tanks and throwing them into the ocean).... and you adjusted Unemployment numbers to include the average of people who stopped looking or took a break from looking for a job .... Okuns Law would PROBABLY still hold....


You can't base a theory on fabricated data points, unemployment and GDP are purely fictictious non-sense numbers to go by at this time because they are too busy skewing the way they are computed in order to make the economy look good wihile it self destructs.


Mon, 03/12/2012 - 09:16 | 2246876 kridkrid
kridkrid's picture

Great post... though I would go even further.  It's not just that the theory is up against fabricated data points... but money itself, in our current monetary system, is a fabrication.  Even if you were to do what you suggest... remove gov't spending from GDP and more accurately measure unemployment (clearly two steps to better understand what it actually happening in the real economy... i.e. a better reflection of life) you are still making measurement based on "money" that isn't an asset, actually, but is itself debt.  Virtually all money is debt with interest attached to it which requires an ever expanding issuance of debt to merely roll debt forward.

Anything in modern economics is little more than mental masturbation as we wait for the debt burden to overwhelm the productive economy... then we get to crash.

Mon, 03/12/2012 - 09:55 | 2246893 LawsofPhysics
LawsofPhysics's picture

Precisely.  The moral hazard in the system has been growing exponentially.  There were several opportunities back in the 70's when we could have insured that the rule of law and the gold standard were both enforced.  We didn't and since then the crimes and criminals have only become more empowered and more brazen.  Any currency will only have value if it is backed by something fucking real.  It does not have to be gold, but it sure as hell at minimum better be a system where fraud is fucking prosecuted and the rule of laws and contracts are upheld so the people have some confidence in knowing that the value of their labor will NOT BE STOLEN!!!

Okay, now I am yelling.

Mon, 03/12/2012 - 10:03 | 2246990 RockyRacoon
RockyRacoon's picture

Beware gold making the mainstream.   Some will see it as the indicator of the "top" -- sell, sell, sell!  Others will see it as "about time" -- buy, buy, buy!

Make your own decisions.

Tonight On CNBC

Follow the journey of gold with unprecedented access to the mines of South Africa and the gold vaults of London. CNBC's Bob Pisani takes viewers inside the trading pits in New York, on to the shop floor of America's largest gold jewelry manufacturer and reveals the never-before-seen largest private gold reserve in the world.

»Premieres Tonight at 9p ET/PT
Mon, 03/12/2012 - 08:54 | 2246837 Whatta
Whatta's picture

well, lying is a whole lot cheaper than printing trillions of inceasingly worthless $US. maybe we can lie our way to a vibrant economy. Keynesian Truthism. those are not tears...I am merely allergic to intense idiocy.

Mon, 03/12/2012 - 09:01 | 2246853 Dre4dwolf
Dre4dwolf's picture

Better to lie than print? probably.

Cheaper? not really... in the long run all these lies will catch up with us, and printing money costs nothing because its purely digital.


There is an actual limit to how much money they can print BTW, because say you printed 100 trillion dollars... in digital currency... you would hit a point where inflation kicks in really bad and there wont be enough paper currency around to complete simple/small transactions.

A carton of milk could cost 1000$ most small grocery stores dont take credit cards for the most part in a lot of places.... and making change is going to be annoying.... they wont go out and print 1000$ bills because people will be paying off all their old debts which are now completely devalued to a few dozen cartons of eggs (you might endup with people paying off their mortgages with a piece of gold jewelery), and we cant have that happen! now can we? because the bankers would lose ALL control over their debt slaves.




The enitre system is so close to collapse its not even funny , all because of the expoenential growth of Government Debt, Currency in circulation and energy cost.

I dont think this system can handle another doubling of the world population.... too unstable.


Mon, 03/12/2012 - 09:42 | 2246933 LawsofPhysics
LawsofPhysics's picture

"all because of the expoenential growth of Government Debt, Currency in circulation and energy cost."

Hey idiot, guess where most of that "government debt" came from?  Ever hear of the "socialization of losses"?

The private debt of failed corporations has been passed on to the government.

Know the real value of your labor?  You fucking better.

Mon, 03/12/2012 - 08:57 | 2246843 GeneMarchbanks
GeneMarchbanks's picture

'Economics has inferred causation into that relationship, giving it a layer of permanence that may not be warranted.  Econometrics has always had this inherent flaw.  The science of modern economics makes assumptions based on certain data, and then extrapolates them as if these assumptions will always and everywhere be valid.'

'Economics is really nothing more than opinionated interpretations and analysis.  But this kind of subjectivity does not jibe with central planning.  Economic control is much easier to accomplish if it is conducted under the veneer of objectivity and science, especially when your marginal goal is historic impoverishment through debt.'

Procrustean economics has now entered the terminal phase. The machinery now serves some abstract virtual reality growth while the people teeter on the brink of irrelevance.

Mon, 03/12/2012 - 08:58 | 2246844 chunkylover42
chunkylover42's picture

Also not occurring to Jon (at least according to his writings) is that government measurement of the data in question - GDP and unemployment rate - are pretty much bogus and almost without meaning.

Mon, 03/12/2012 - 08:58 | 2246845 BrotherBroGo1
BrotherBroGo1's picture

Maybe we rely too heavily on the USD as our standard of economic output?


Mon, 03/12/2012 - 09:22 | 2246888 kridkrid
kridkrid's picture

Bingo.  The meaningless of the dollar makes all economic data remarkably suspect, at best.  When the rug gets pulled out, the meme will be "nobody could have seen this coming"... but it's not so mysterious.

Mon, 03/12/2012 - 08:59 | 2246848 azzhatter
azzhatter's picture

US is becoming emblamatic of a third world country- high quantity, low quality jobs

Mon, 03/12/2012 - 09:28 | 2246903 HD
HD's picture

Thank you. Come again!

Mon, 03/12/2012 - 08:59 | 2246849 azzhatter
azzhatter's picture

US is becoming emblamatic of a third world country- high quantity, low quality jobs

Mon, 03/12/2012 - 09:00 | 2246851 fuzed
fuzed's picture

Decline in US household debt (overspending?)

Mon, 03/12/2012 - 09:05 | 2246861 Dre4dwolf
Dre4dwolf's picture

debt forgiveness.


People aren't paying their credit cards off, I know atleast 30 people who are just maxing out their cards and then suing the CC companies for fraud and WINNING + getting their debts cancled out by the judge. (some are making a living off of it because no jobs)


The system is toast, the bankers lost.




Anyone still paying their bills is a fucking moron, its time to save and start thinking about survival for the next 10 years.

Mon, 03/12/2012 - 09:08 | 2246866 SheepDog-One
SheepDog-One's picture

thats how I see it, this game is over. Now the FED has to lay down its crappy pair of 2's hand that theyve bet the entire pot all-in.

Mon, 03/12/2012 - 09:17 | 2246872 LawsofPhysics
LawsofPhysics's picture

Maybe, but it will be the medium to small american businesses that get caught in the middle.  We are a small (172 employees) company that does business worldwide.  In the end, the lazy dishonest fucks willbe the one who are "toast".  I will look after my employees, but shit will get fucking "tribal" pretty fucking quickly and if you don't think the "bankers" have tribes you are a fucking idiot.  I am not talking about the big banks that got us into this mess, I am talking about the local banks and credit unions that support businesses like mine.  FYI, if you don't know what"tribes are in your area I suggest you start attending local city and county commission meetings, this is where it is easiest to spot the local "owners" like myself as we constantly have to fight these paper-pushing fuckers to get anything done.

Either way, we get to find out precisely what everyone's labor is worth, fucking bring it.

Mon, 03/12/2012 - 09:27 | 2246902 rsnoble
rsnoble's picture

You aren't the only ones that have to fight the bastards at the courthouse!  Those are the fkrs I hate the most as they absolutely refuse to join the depression and they have the power to just tax more. Don't want to pay? That's ok we'll just sell you house. That bullshit needs to end.

In the end everyones going to get a haircut. I also don't like business owners that seem to think they'll be making much high profits with lower wages. In the beginning of globalization that was true. When it all equals out I don't think so.  The last bastion of overvalued contracts will be gov't work and those too are going to come to a screaching halt.

Mon, 03/12/2012 - 09:35 | 2246917 LawsofPhysics
LawsofPhysics's picture

"In the end everyones going to get a haircut. "

Exactly, know the value of your labor and that of your employees?  You fucking better.

Mon, 03/12/2012 - 09:46 | 2246942 mayhem_korner
mayhem_korner's picture

People aren't paying their credit cards off, I know atleast 30 people who are just maxing out their cards and then suing the CC companies for fraud and WINNING + getting their debts cancled out by the judge.


If this is true (not arguing), then the GAME is one giant socialization of unrepayable debt, meaning private citizens are incentivized to emulate the government Ponzi.  And so, the Ctrl +P papering-over simply has a broader base.

But what is the eventuality of it - how is the game "won"?  Eventually, the gov't will confiscate pretty much everything, legally or illegally, as part of a feigned effort to try to "make good" on the debt.  So, in theory, unless one is in a "protected class," everyone stands to lose potentially every drop of wealth in exchange for the right to "serve" as a "citizen." 

Seems Au and Pb really are like kryptonite to the government.


Mon, 03/12/2012 - 09:02 | 2246856 Moneyswirth
Moneyswirth's picture

End of an Error

Mon, 03/12/2012 - 09:40 | 2246928 CPL
CPL's picture

I like that.

Mon, 03/12/2012 - 09:11 | 2246869 chinaguy
chinaguy's picture

"from a peak of 10% in October 2009"

2009 number employed 140,000,000

2012 number employed 140,000,000

There are no new net jobs in the past three years no matter how you massage the unemployment numbers.

Mon, 03/12/2012 - 09:16 | 2246874 Hedgetard55
Hedgetard55's picture

+55 chinaguy,


     WSJ is a propaganda rag now, they don't do any real analysis anymore. Rupert running scared now, needs to mollify Obama and Holder.

Mon, 03/12/2012 - 09:33 | 2246912 francis_sawyer
francis_sawyer's picture

Full employment = half of the people working on one side of the street at McDonalds & the other half on the other side of the street working at KFC all selling dollar meals & large buckets to each other (using SNAP cards for payment)...

Mon, 03/12/2012 - 11:02 | 2247183 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

Except that in 2009 the number employed was 130,647,610.  I guess bias works both ways.

Mon, 03/12/2012 - 13:35 | 2247726 Escrava Isaura
Escrava Isaura's picture

Bwahaha: Accordingly with the “IRS” the number of tax returns filled [link]:

in 2009 = 140,494,127. However;

in 2007 = 142,978,806

Mon, 03/12/2012 - 09:14 | 2246870 Hedgetard55
Hedgetard55's picture

The Wall Street Journal has become a worthless POS rag that is as big a market shill as anyone on CNBC. Thanks Rupert, great fucking job.

Mon, 03/12/2012 - 09:41 | 2246930 HD
HD's picture

How dare you sir! Suggesting the noble, honorable, open minded Rupert Murdoch is biased - well, I never. Rupert's honesty and journalist integrity are hacking away at all the lies and corruption you find at other media outlets.

How could you expect anything less from a man with the word "fair" tattooed on his left testicle and "balanced" tattooed on the right one.

Mon, 03/12/2012 - 09:44 | 2246938 espirit
espirit's picture

Yep, I cancelled my free subscription to the WSJ after two years because they had the balls to call and ask me to pay for it.

Alas, made a good "mullet wrapper" though a little rough on the anus.

Mon, 03/12/2012 - 09:16 | 2246875 billwilson
billwilson's picture

What the numbers don't capture:

1. A lot of illegal Hispanic workers simply went home. Those jobs may never have been counted (although the workers did spend money) and therefore the improvement in the unemployment rate is fictitious (the job losses at the start of the recession were worse than reported).

2. Most of the enw jobs are waitresses and temp help (about 50% of last month's gain), typically minimum wage type jobs ... while bonus cuts and job cuts on Wall Street are actually talking about real money. So gain one server job, cut a WS bonus (while keeping the job) and the unemployment rate drops, but the economy suffers (GDP decreases).

Mon, 03/12/2012 - 13:44 | 2247748 rwe2late
rwe2late's picture

Also apparently not clearly considered in establishing size of labor force:

1) the growth in the prison population (world's highest)

2) growth in aged population >65 . What percentage are retired, working, or seeking employ, especially as compared to years past?

3) youth population 21<.  percentage in school, dropouts, seeking work?

4) the impaired and disabilty rates in the potential labor force ( in view of the arguably increasing factors of obesity/diabetes/military acivities/pollution/ etc.

I believe the government could research and more readily provide that info and more if they wanted the public to know.

Mon, 03/12/2012 - 09:18 | 2246880 stuka
stuka's picture

Just for my guidance: how is part time job represented in the statistics?

How has the activity rate evolved?

Am I alone with the assumption that causations may change over time as economies /  strcutures change? Here we are,  back to the old dabate whether GDP is a good measure of economic develoèpment at all (quality changes are totally neglected aren`t they in the GDP figs?)

Mon, 03/12/2012 - 09:33 | 2246911 mayhem_korner
mayhem_korner's picture

whether GDP is a good measure of economic develoèpment


Good Q.  Macro economic indicators are always coarse, but if they are measured consistently, I believe they can be helpful.  Much of the problem now is inconsistency in measurement.  GDP is inseparable from: inflation, balance of trade, and inventory accounting methods, to name a few of the underlying "levers."  Manipulation/inconsistency in any of those biases the top line.

Another question I think is interesting is the relationship between "employment" and productivity.  Not sure that one's got a 97% R-squared given the size of the public sector workforce.  Just my 2 oz.

Mon, 03/12/2012 - 09:20 | 2246883 rsnoble
rsnoble's picture

What??? What are the chances this one Jon Hilsenrath is really that fucking stupid??  If the head honchos are really that dumb oh boy are we screwed.

My lastest conspiracy for monday am:  What are the odds once the Enterprise gets to it's destination--and false flags put aside--that some shit gets started over Iran and that's when the stock market shits all over itself?  Then all the blame will be on the war and have absolutely NOTHING to do with our sorry ass financial picture. Thus the war will be "worse than expected".

Other than that I just don't see the reason to have 3 carriers when our overlord claims we aren't going to attack till after the election.  I mean I guess it could be "persuasion" but most of our recent discussions have been more tilted to "imminent" attack. It looks like a go to me.

Mon, 03/12/2012 - 09:24 | 2246895 Seasmoke
Seasmoke's picture

ALL it will take if for Obama to fall behind 5% to Romney

Mon, 03/12/2012 - 09:37 | 2246921 LawsofPhysics
LawsofPhysics's picture

WTF?  There is no difference between Mitt and Barrack.  Wake the fuck up!  There are not two parties, just one, for the banks by the banks.

Mon, 03/12/2012 - 09:42 | 2246932 Seasmoke
Seasmoke's picture

of course there is NO difference between either gang of thiefs , but if you think there is NO difference in Obama winning or losing, you are sadly mistaken

Mon, 03/12/2012 - 09:49 | 2246946 kridkrid
kridkrid's picture

You're a pawn, sadly.  The system needs you and people like you.  Obama will be re-elected if he can move their ball forward... if he can't, he'll be replaced.  Neither outcome will create anything positive for you or your family.

Mon, 03/12/2012 - 09:50 | 2246955 LawsofPhysics
LawsofPhysics's picture

"you think there is NO difference in Obama winning or losing"

BOTH are funded by wall street, the same major banks, and a number of major firms in the financial sector.  Enlighten us retard, what will be different with respect to trading and finance (which is what this website is about in case you fucking missed it)?

Mon, 03/12/2012 - 10:07 | 2246998 Seasmoke
Seasmoke's picture

start a war and tell the people you cant replace a president at a time of war.....the post i was replying to fuckface was regarding Iran and warships or do you just come here for the pictures

Mon, 03/12/2012 - 10:32 | 2247087 kridkrid
kridkrid's picture

If our oligarchs want war with Iran, we'll get war with Iran (and my money is on it).  You have your conspiracy slightly misordered, IMO.  War isn't conspiritorial to create a political outcome.  Politics is conspiritorial to create a war outcome.  

Mon, 03/12/2012 - 10:40 | 2247112 LawsofPhysics
LawsofPhysics's picture

"Politics is conspiritorial to create a war outcome"

There you go.  War is required, in order for the elite to maintain the system and control.  Don't want the system to survive?  Don't play along.  Fuckface indeed, you stink of fear, bloody pawn.

" First they ignore you, then they laugh at you, then they fight you, then you win" - Ghandi

Mon, 03/12/2012 - 12:40 | 2247538 HellFish
HellFish's picture

Supreme Court appointees.  And that is enough.

Mon, 03/12/2012 - 09:36 | 2246918 Hedgetard55
Hedgetard55's picture

Hard to believe he believes his own bullshit, but... who knows? This dude is Benny Bernank's favorite leak to guy.

Mon, 03/12/2012 - 09:36 | 2246920 SDRII
SDRII's picture

·         Iran, Israel: Former Mossad chief Meir Dagan said that an Israeli strike on Iran would lead to a missile attack on Israel that would have a "devastating impact" on the country, in an interview that aired Sunday on CBS's 60 minutes.

·         Uganda, US: Uganda says it welcomes the online campaign against the rebel Lord's Resistance Army but warns against exaggerating the LRA threat. In a statement published by a state-owned newspaper (New Vision), the government approved of campaigns to raise awareness of the LRA and the plight of the rebel group's victims. But it said any campaign must take “current realities” of the LRA situation into account. The government Monday noted that the LRA is no longer active in Uganda, and said the rebels are “diminished and weakened,” with fewer than 300 fighters.

·          KONY video talks of April 20: “supporters of the movement to "blanket every street, every city" on April 20”

Mon, 03/12/2012 - 09:22 | 2246886 Seasmoke
Seasmoke's picture


Mon, 03/12/2012 - 09:27 | 2246899 mayhem_korner
mayhem_korner's picture



Indeed...greeters on your left AND your right as you pass through the front gates can really chip away at the UE rate.

Mon, 03/12/2012 - 09:23 | 2246894 Conrad Murray
Conrad Murray's picture

That post from Mr. Snider is excellent. I guess I missed it the first time around. Thanks.

Mon, 03/12/2012 - 09:33 | 2246896 mayhem_korner
mayhem_korner's picture

according to Labor Department data


That thar be th' problem.

Mon, 03/12/2012 - 10:24 | 2247053 Problem Is
Problem Is's picture


Mon, 03/12/2012 - 09:27 | 2246898 Seasmoke
Seasmoke's picture

why would the economy improve , when the new job you just got hired for pays LESS than 99 weeks of unemployment checks

Mon, 03/12/2012 - 09:31 | 2246906 Stuck on Zero
Stuck on Zero's picture

How do economic models account for corruption of data?

Mon, 03/12/2012 - 09:34 | 2246915 mayhem_korner
mayhem_korner's picture



isn't that the primary input?

Mon, 03/12/2012 - 09:38 | 2246924 LawsofPhysics
LawsofPhysics's picture

Yes, in computer terms; "garbage in, garbage out"

Mon, 03/12/2012 - 10:23 | 2247045 Problem Is
Problem Is's picture

Printers used the term GIGO when computers were only in an academic paper by Alan Turing...

Mon, 03/12/2012 - 09:38 | 2246923 847328_3527
847328_3527's picture

Same applies to college grads now. Even though the quantity of grads has gone up, the quality has plunged due to massive gubberment loans (debt) to any warm body that signs up for any degree at any online college.

PBS had a show proving many if not most of these "grads" cannot find employment.  People forget that quality sometimes counts more then quantity.

Mon, 03/12/2012 - 09:38 | 2246925 heavy_metals
heavy_metals's picture

Most of the analyses of our labor market ignore the "cheap labor" labor arbitrage that's been taking place over the past few decades.  Our labor market has been in disarray long before 2008 financial collapse. 

Through outsourcing jobs to third world nations, American businesses were able to achieve huge cost savings on labor and increase their profits.  The stickler was that there were some service based jobs that required a physical presence and couldn't be outsourced.  Business solution to that was to expand guest worker visa programs (including student visas) to bring third world labor into the US with the sole goal of displacing costlier American workers. 

I've been saying for years that the above eventually "breaks" our labor markets because workers can't make third world wages while paying high standard of living costs in USA.  Business profit margins will decline, IMO, because they must to sustain this dynamic. 

From examining jobs numbers, we have the same number of jobs as a decade ago, yet we've allowed into the USA approximately 2.5 million migrants each year since then.  These figures don't match the rate of retirement, so we can't conclude they're replacing boomer retirees.  In fact, if we examine the demographics of the unemployed/under-employed, we see all age ranges and a disproportionate number of young workers displaced. 

One doesn't have to be a rocket scientist to determine that if we're not creating new jobs and we don't decrease migration, we can deduce that either new migrants are finding jobs and displacing American workers, or they're immediately going onto welfare.  Which is it?  These are answers that should be provided by BLS.  Does the flood of new migrants explain the rises in social welfare programs? 

We need better tracking of guest worker visa programs or a moratorium on them, until the number of jobs increase and we make a huge dent in the number of unemployed Americans. 

Mon, 03/12/2012 - 09:49 | 2246949 michael_engineer
michael_engineer's picture

Economics has failed to consider the true driving forces of modern economies : Energy and natural resources.  Invalid assumptions that housing always goes up, Okuns law, etc, are not easy to see when on the upslope of increased production and input into an economy of energy and natural resources.   It was only when the production curves for energy, and resources neared their peaks and started hitting points of inflection that it started to become obvious that economics and reality were diverging.  The below post covers some interesting points that might come into play as the old economic theories and reality diverge.

The economy may someday be contracting due to a loss of virtual "energy slaves".  Even if all other things are held constant, if the multiplying effect of energy slaves that has benefitted industrial society decreases due to energy resource depletion, then that will invalidate many modern and current economic considerations.  Each energy slave that we benefitted from when energy production was increasing was a virtual contributor to world GDP.  If at some time we start losing those virtual energy slaves, then world GDP will then decrease then too.

Mon, 03/12/2012 - 09:53 | 2246963 LawsofPhysics
LawsofPhysics's picture

There you go.  Going long sationary bikes hooked up to generators.  Want food stamps? Fucking pedal.

Mon, 03/12/2012 - 10:12 | 2247012 michael_engineer
michael_engineer's picture

One might even consider that the virtual "energy slaves" are the dominant contributors to national and world GDP.

Mon, 03/12/2012 - 09:54 | 2246964 vh070
vh070's picture

Why is common sense so uncommon?  Ah, the irrationality of humans!  We see a pattern and we stop thinking.

Mon, 03/12/2012 - 10:01 | 2246977 Roscoe
Roscoe's picture

Let me get this straight: there's no real growth in employment, no real growth in the economy, more folks on entitlement than ever in history, more people employed by the government than ever in history (and they're making higher wages and get better benefits, including an honest-to-god retirement check when they end their brief careers), the unemployed never run out of benefits, they simply slide over to the disability side of entitlement programs (meaning we can add public entitlement to death and taxes as the only sure things in American life), productivity keeps increasing (meaning the few of us still employed are busting our collective asses to keep this inverted pyramid upheld and balanced, in our personal daily Sysyphusian hell), the feds are printing dollars to infinity and beyond (ensuring that, regardless of prudent savings, wise investment and the eschewment of debt, our 'defined contribution plan' and other self-directed efforts to plan for our later years and keep us off the dole and our children's over-burdened backs, will be worth a fraction of its anticipated worth. Mega bummer.

I'm starting to feel a lot like Edward G. Robinson's character in Soylent Green. But wait! Rather than check in to the neighborhood euthenasia center (a wholly-owned subsidiary of the Soylent Company) to bid a media-rich adieu to the all the surviving ignorant suckers, I think I'll bet the farm on Soylent Green futures! After reading the Pink Slime (Soylent Pink?) post this weekend, I've seen the future and it is as tasty as it is profitable! I'll sit back and watch the soon-to-be-diminishing entitlement rolls, knowing that each downtick in the totals translates into tasty treats for future citizens, and obscene profits for us protein-source-enlightened visionary investors. In no time at all I'll be rockin' the penthouse suite and living the good life, thanks to Uncle Ben and the Pink Slime Solution! Central planning rocks!

Aside: I now see the pure genius of the free government cheese program! It was a pilot program to gauge the weight gain potential in the lower class of citizens, and was a pioneering effort in the development of the CNP (Citizenry Nutritional Potential) index.

I guess if you can't beat em', eat em'!



Mon, 03/12/2012 - 10:19 | 2247030 Problem Is
Problem Is's picture


Mon, 03/12/2012 - 10:16 | 2247015 Bansters-in-my-...
Bansters-in-my- feces's picture

It looks like all is well with silver price suppression,gold too.

Ps...Fuck Off and die bankers.

Mon, 03/12/2012 - 10:18 | 2247024 Problem Is
Problem Is's picture

+5... Score one for Analytical Tyler(s) with this excellent analysis...

What Would Sarcastic Tyler(s) Say?
Would Sarcastic Tyler(s) tell Hilsenrath he could keep scratching his useless cranial until he is as bald as The Bernank?

And that he still could not figure out the flaw in Okun's Law because Economics is a Social STUDY... not a Social SCIENCE...

Hence Economics can never prove any of its theories by rigorous mathematics... Only by fudged numbers and flawed statistics...

Only Sarcastic Tyler(s) know for sure...

Mon, 03/12/2012 - 10:26 | 2247059 dolph9
dolph9's picture

The only way to fight all of this manipulation is to strategically "drop out."  That's the only way to save our souls.

Much easier said than done, but dropping out basically entails stopping your participation in all the meaningless, BS activities that constitute American life.  In the process, you'll lose alot of friends and contacts, so it's hard.

If they want your money or your life, make them physically come to your doorstep and put a gun to your head, and see how far they get.

We must reject, with every ounce of our being, the socialistic idea of "we are all in this together," which of course brings about currency destruction and ruin for everyone.

I've already done alot, but always feel I can do more. 

Mon, 03/12/2012 - 10:47 | 2247142 pmm009
pmm009's picture

Open question:   The adjustments for seasonality must assume much less construction work in the winter?  If this is true, the numbers will be inflated as the weather has been warm enough that most of the construction work has been ongoing over the past three months.  Therefore, will the seasonal adjustments then cause a geater reduction on the downside during the summer months?

Mon, 03/12/2012 - 10:59 | 2247174 ebworthen
ebworthen's picture


When you are making fudge there is no meat involved.

Mon, 03/12/2012 - 10:49 | 2247144 Winston Churchill
Winston Churchill's picture

It just cannot have anything to do with ignoring the rampant inflation could it ?

Just went and picked up my monthly meds.

Old fashioned Sulpha,nothing fancy,off patent for 40 years.

Last month $13,this month $43.

But theres no inflation.True ,its hyperinflation !

Mon, 03/12/2012 - 11:01 | 2247167 ebworthen
ebworthen's picture

"The biggest simplifying mistake in economic history was believing that a centrally planned, debt-based economy was a near-perfect substitute for a real capitalist economy, working bottom-up through unfettered price discovery, that values real production."

Who would have thunk that the Western Democracy (Republic) that supposedly valued real capitalism and individual liberty would devolve into a cesspool of punishing responsibility, encouraging failure, and centrally attempting to plan outcomes that completely defeat the invisible hand, risk/reward, savings, investment, and sanity?


Mon, 03/12/2012 - 11:33 | 2247266 therearetoomany...
therearetoomanyidiots's picture


Mon, 03/12/2012 - 11:25 | 2247243 gwar5
gwar5's picture

Truth Decay (a term courtesy another ZH poster)


I think the Okun discrepancy puzzler may be even worse than explained in the article. It's dependent on GDP which is supposed to be adjusted for inflation, but since the inflation numbers are fake, the GDP is artificially inflated. John Williams explains this funny business with GDP at his Shadowfacts site.

So if the GDP is artificially high, it may mean the reported outsized creation of temporary jobs is even more at variance, and implies a worse situation, which is backed up by real world observations of no quality jobs, just many part timers and people who are out of the system working for cash.  

Alas, when you try to peak behind the curtain to see the Wizard you collapse the wave function and alter perfectly good lies.  The Wizard: "Who you gonna believe, Scarecrow, Heisenberg or your lying eyes?"


Mon, 03/12/2012 - 12:09 | 2247405 ebworthen
ebworthen's picture

I'd bet that Schroedinger's cat is in there with the Wizard, somewhere.

Mon, 03/12/2012 - 13:39 | 2247741 Zymurguy
Zymurguy's picture

That's why you should never cheat at golf.  There's no end to the cheating and you'll never know what reality is once you start.

Mon, 03/12/2012 - 12:08 | 2247404 tony bonn
tony bonn's picture

yes, the birth/death model is custom made to fit any electoral need or emergency.....if you need 200,000 jobs per month, the nifty presto-magik birth/death model will deliver them without fuss or muss....just put in a simple request to the bls and they will whip up as many jobs as you's as simple as 1-2-3...

and that's not all! as soon as the numbers are published, the teleprompter-in-chief will be plastered all over the airwaves with lips moving at the speed of light lying about the wondrous miracle before your very eyes....

before you know it, everyone in america will rush to your electronics store loading up on lcd tvs, microwaves, and free chics...

try yours today!!! don't delay, supplies are limited!

Tue, 03/13/2012 - 07:46 | 2247722 carlnpa
carlnpa's picture

Jon scratch your head no longer.  The official labor numbers are a complete fabrication bearing no resemblence to reality.  No economic rules apply any longer, no TA is valid.

The true number is in the USDA SNAP participation rate, + 5.5% Dec 2010 to Dec 2011, 44.1 million to 46.5 million.

An increase of about 20 milliion since 2007.

Simply almost 15% of the US population is on SNAP.

There has been a one to one correlation in loss of unemployment benefit and subsequent increase in SNAP.

Mon, 03/12/2012 - 13:36 | 2247731 Zymurguy
Zymurguy's picture

Yeah it seems the traditional economic models and principles are in need of adjustment - or should I just simply say they need to grow up.

The facade is stripping away and underneath it is Austrian.

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