Pre-Election Farce

October Jobs and Unemployment Numbers Were Not Credible, Artifacts of a Broken Reporting System and/or Direct Manipulation - John Williams, www.shadowstats.com

Also from John Williams' latest report, which is worth the price of subscription if you want to have access to someone who has studied and analyzed Government statistics over several decades:

The headline numbers (or the general substance of the reporting results) usually are known a week or so in advance, and early release of data to officials in various administrations and at the Federal Reserve has been common in the past and as suggested in former Clinton Labor Secretary Robert Reich’s autobiography

With a downturn in October’s online help-wanted advertising, weakening employment growth in the ISM’s October purchasing managers manufacturing survey, and significant indications of slowing activity, not accelerating economic growth—to be discussed in the upcoming Special Commentary—the October labor data indeed were not credible.

Enough of that.  I think the market's response to the jobs report on Friday told the real tale, if you don't want to believe the facts as they are presented by guys like John Williams...

Along with any credibility associated with the jobs report, I want to bury the idea that either Presidential candidate will have a specific effect on the stock market, precious metals, or the catastrophic U.S. fiscal/economic situation.  The popular promotion in the media is that Romney will be good for stocks and bearish for metals.  The latter idea I guess because of his threat to get rid of Bernanke, who is an economic strawman for the banks anyway - as would be his successor.

Let's take a look beneath the hood of this argument.  We'll look at the black and white numbers with no editorial or slant.  The Government is currently borrowing 40 cents of every dollar it spends.  If it were to cut spending in a meaningful way to reduce that number - let's say a 10% cut across the board in order to reduce that borrowing rate to 30 cents - imagine what that would do to the economy.  Imagine if they cut entitlement spending by 10%.  People would starve and seniors would go without healthcare.  The Dept of Defense,  the largest employer in the world with 3.6 million employees, would have to unload close to 400,000 employees.  The only thing a 10% cut would do is reduce the rate at which the Government is accumulating debt, if the economy stayed the same, which it woudn't.

If the Government cut spending 10% to try and take a whack at the deficit spending, it would send our system in an economic tailspin and throw our economy into a depression that would make the 1930's look like a day at Disneyland..  Now imagine that Congress passed a hard law require immediate balancing of the budget.  40% of all Government would stop.  That would annihilate our system.  Armageddon.  Mad Max.  A balanced budget would only stop the increase in debt accumulation, it would do nothing to reduce the $16+ trillion outstanding.  Ahh, but under any of these scenarios, Romney is promising 12 million new jobs...

My point here is that there isn't any possible "fix" for our system that either Romney or Obama can implement in order to solve the fiscal cliff problem without sending our country into chaos.  To be sure, this would lead to the "reset" our country needs, and in the long run it would be a good thing, but there isn't one sane person out there who would sign up for that.  Neither Romney or Obama have any choice except to extend the madness of more deficit spending, more debt accumulation and more money printing.

If you think Romney has some sort of "magic underwear" solution he's hiding, please read the quote from Bill Buckler's Privateer, probably the most candidate and truthfully analytic newsletter available:

Mr Romney has now been the official Republican candidatefor two months. Over that time, he has spent an unprecedented amount of money (as has his opponent) to get out a “message” that boils down to this:  “You’re better off with me than you would be with him!”  He has said absolutely nothing about his “plans” to address the fiscal and financial condition of the US and its government. There is a good reason for this, Mr Romney doesn’t have any plans.

I've been whining about the latter statement since the first debate.  And the reason neither Romney nor Obama have laid out a specific plan is because any plan to cut spending and debt accumulation would destroy the economy.  This is what happens when you have an economic system that is based entirely on fiat currency and very little actual substantive economic production.  Hell even Apple's Iphones and Ipads are manufactured in China.  For some reason many Wall Street analysts have said that the new Iphone would add 1% to economic growth.  Given that Apple's stock price is down over 13% since the new Iphone was introduced, I think we can see how retarded that notion is.

In addition, anyone notice how the Fiscal Cliff deadline was never addressed in the debates.  It's related to the previous point, but it's worth pointing out, because neither candidate can possibly do anything with that situation except override the legislation and increase the Treasury debt limit by quite a bit.  Even if the Fiscal Cliff were allowed to kick in - and we know it won't be - the Treasury debt limit would still have to be raised.  I've seen some estimates which suggest that we would be looking at an initial increase of at least $2 trillion in order to fund the Government for the next 12 months.

So as you can see, regardless of which candidate prevails tomorrow, they both face the same unsolvable, catastrophic problem for which neither has laid out a gameplan to address because any action taken to address the problem sends our country into economic and social Armageddon.  For that reason, the Fed will have to continue increasing QE in order to continue buying Treasury bonds in order to finance the voracious, unstoppable Government spending.  Moreover, for those reasons, the current price pullback in gold and silver should be bought with both hands, as it is a true gift from JP Morgan and the CFTC.