Thursday, March 3, 2011

Some General Analytic Commentary...Today's Jobless Claims Number Was

Total B.S.  Today's jobless claims report from the Dept of Labor is being celebrated all over the media and by perma-bull idiots as proof the labor market is recovering.  But let's look at the details, shall we? Please keep in mind that the headline number is a "seasonally adjusted" mathematic manipulation, the calculation of which no one outside of the DOL can figure out.  The headline number reported 368k claims, a decline of 20k from the previous week.  But let's look at what is really going on.  Has anyone bothered to look at the "extended benefits" number.  The extended program moves people from the weekly claims program to a program which enables jobless claimees to file for up to an additional 52 weeks, with a total of 104 weeks available.  The details are LINK

The golden truth is that the number of people filing extended benefits increased to 850,372 - or an increase of 88,689 from the previous week.  In effect, the number of total jobless claims actually increased by 68,689, the difference between weekly and extended.  But in true Orwellian fashion the Government and media only report the weekly number in the headline and anyone paying attention to local news - print and television - will only hear about the headline number and worry that everyone else, other than themselves, is finding good jobs.  Feel better now?  Here's the report if you need to verify my math:  LINK (there's actually several thousand additional claims in other categories but I'm too lazy  to do the math).

The housing market.  Yesterday the Mortgage Bankers Association reported its weekly mortgage applications index.  The purchase index - the one that's relevant to assessing the health of the housing market, showed another decline of 6.5% from the previous week and a 19.6% decline from the same week a year ago.  Double digit declines in this number from last year's already low index base indicates to me that the truth about the housing market is that it is starting to collapse again.  It's also interesting to note that I'm finally starting to see some "non-conformist" mainstream analysts admit that housing is in trouble. Here's the report:  LINK

QE_how_many?  While media morons and Wall Street permabulls discuss the timing of the Fed potentially tightening its monetary policy and unwinding its QE programs - based on the logic of a strengthening economy based on arguably fraudulent data, but unarguably wrong data - the real question hanging out there is "who will buy all of the new Treasury issuance once QE2 is done?"  This is given that, effectively, the Fed has monetized nearly all of the recent new Treasury issuance with QE2.  If QE3 doesn't happen, where will the funding for our Government come from?  Assume tax revenue continues to decline, especially inflation-adjusted, and that the Federal Government will never cut actual spending.  Until someone can present me with a fully-supported argument explaining how this will happen, expect QE3, then QE4, etc ad nauseum ad dollar gold?

No Country For Old Men/The Road.  Hate to say it, but the geopolitical vision of Cormac McCarthy as expressed in those two novels is starting to crystalize into a frightening reality.  If you think I'm nuts, just take a look at these news reports from from around the world yesterday:

Will The U.S. Attack Libya?   Civil Unrest In Bahrain   2 U.S. Soldiers Slain In Germany
Texas Warns Students To Stay Away From Mexico

If you have not read those two novels, I highly recommend doing so this month.  They are extraordinarily engaging stories, with what I believe contain highly prescient visions of what could unfold in our world. And Cormac McCarthy is a brilliant writer, both stylistically and cognitively.

Sorry, but I'm just outlining the truth - and it's the truth whether or not it's interpreted as "doom and gloom."  My philosophy is that everyone should enjoy what they can, as much as they can, while they can.  Capire tutti?


  1. Thanks, I'm gonna go and blow my brains out now.

  2. LOL - dude just have fun now, worry about the future tomorrow...

  3. some of us do not buy green bananas

  4. Dave,

    I think there are two major factors that'll affect the decision of the Fed to do more QE or not.

    States/cities/municipalities are bankrupt and they need bailouts. The question is - Fed being a private institution, will it accommodate bailing out of these public institutions? The answer is likely to be no, although political pressure may dictate otherwise.

    Even if we assume that the Fed won't bail out these insolvent public institutions, more unrest in the middle east will send oil prices sky rocketing. Its not immediately clear to me how this will impact their fiscal policy, will it force them to do more QE?

    In either case, I see QE3 etc. more probable than no QE after June. what do you think?

  5. Dave,

    In regard to buying bullion. Should I purchase random bars/coins or should I pay the extra premium for sovereign bars coins? Do you think as pm continue to appreciate they will hold the premium on the sovereigns over the kitco/apmex/sunshine stamped bullion that sell closer to spot.

    I own plenty of miners but have very little physical bullion and would like to start accumulating. Thanks for your advice!


  6. I recommend only silver eagles and maple leafs

  7. If QE3 does not start makign the rounds by May, the FEd is risking a stock market drop going into summer. As a higher stock market is all they have to show for progress, I think QE3 is already on the way just not communicated as yet.

  8. Dave, what about buying junk silver coins? Do you recommend those as well?

  9. It's falling apart. Now JPM is paying over $50 to settle. The London market is pricing their credit in silver at horrendous levels. If Benny at the Fed stops printing JPM will blow up because short date money will be more expensive than long date and their interest rate swaps will explode. Whichever way you look at it the choices are either lose every firm on Wall Street or lose the dollar to hyper inflation. Guess which one Benny's going to choose.

    They killed a lot of people getting the Fed system installed and they killed a lot of people keeping it in place. They are not going to go quietly into the night and they are going to have to pry the printing presses out of Benny's cold dead hands. This is the reality. Nobody but the Fed can keep the world liquid right now because nobody is going to print SDR's at the rate Benny's doing currency swaps. It's all in full flight now.

    Harvey Organs says:

    I am here to give you a more accurate update (and a first hand account of what happened on Friday Feb 25). Our group was detemined to stand for delivery going into Monday because we were not going to take a 30 percent premium on a price of $33.50. It was reported that Blythe offered 50 percent premium. That was not even close in our case. We got over 80 percent premium. That's right. Over $50 per contract on the condition that our group sell all our contracts

  10. Exactly GYC

    RE: junk coins. At the end of the day, silver is silver. My personal view is that it is worth paying a premium for sovereigns like eagles and maple leafs because they are recognized anywhere you go in the world and extremely hard to counterfeit. There's a reason they trade a premium and its not because of nuimismatic value...the premiums will go up on all of it, i bet more on sovereign-minted coins...

  11. All this was inspired by the principle--which is quite true within itself--that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.

    —Adolf Hitler , Mein Kampf, vol. I, ch. X[1]

    “If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.” Joseph Goebbels

  12. LOL from your mexico press link...

    * Don't drive at night or accept rides from people you don't know.
    * Stop at all roadblocks.
    * Don't go into shabby-looking bars or stray away from brightly lit places.
    * Don't wander on the beach at night.
    * Don't bring ATM cards linked to your bank account - these can facilitate "express kidnappings."
    * Don't get irresponsibly intoxicated or accept drinks from strangers (regardless of your gender).
    * Always travel in groups.

  13. Dave, I'm interested in your take on the article below about "printing" money. Thanks!

  14. This is what I think of that article:

    Second, the author is under the impression that the economy will pick up and the Fed can start withdrawing printed money by selling some of the assets it has purchased. A lot of the assets will be Treasuries and the world is full of Treasuries, that's why the Fed has to buy them. The other assets are shitty mortgages and other toxic asset-backed, derivative-laden crap. No one wants that shit.

    The way our system can recover is by the Fed driving the dollar below at least 50 and probably lower, to make our currency competitive with all the other fiat currencies. But that will also be accompanied by a painfully dramatic decline in the overall standard of living for most people in this country...