Friday, December 2, 2011

You CAN'T Be Serious

Before I get to the ridiculous non-farm payroll report the BLS released this morning (believe me, it's a serious pile of dog shit with chocolate cupcake frosting spread all over it to mask the stench), I wanted to point out that the media is finally starting to scrutinize CFTC Chairman Gary Gensler with regard to his oversight - or lack thereof - and role in the MF Global fraud.  I want it noted that this blog outlined Gensler's unscrupulous ties to Corzine a month ago:  Gensler and Corzine - Two butt-buddies, with reach-arounds

I'm starting to think that "BLS" - instead of Bureau of Labor Statistics - stands for Bureau of Ludicrous Shit.  The monthly non-farm payroll report was released to today and the numbers they are reporting are so absurd that they go well beyond any possible tiny shred of credibility.  The headlines scream:  "Jobless rate falls to 8.6%, 120,000 jobs added."  Sounds wonderful, right?  Go out and spend!  However, let's look at the truth behind the headlines.

Here's the numbers you won't see being reported by most news media sources.  The unemployment rate dropped from 9% to 8.6%.  This is a very highly manipulated number and it is determined by taking the size of the labor force - as reported and defined by the BLS - and dividing that number into the number of unemployed.  But first understand that the labor force is defined as "those employed plus those who are actively looking for a job."  There is a large amount of leeway for manipulation in this metric.  At any rate, in order to make the unemployment rate better, all the BLS is does is somewhat arbitrarily reduce the size of the defined "Civilian labor force."  If you go to page 5 of the link I provide below, you will see that from Oct 2011 to November 2011 the "civilian labor force" indeed declined from 154.198 million to 153,.883 - or by 315,000.  This means that according to the Government, 315,000 people stopped looking for work (or possibly got fired from their Walmart greeter job and slithered away into a cave).  Also on page 5 is the "labor force participation rate."  This shows the percentage of people in the economy who are considered to be part of the labor force.  This number dropped to 64%, the lowest rate since 1983.  Given that the population is substantially larger now than in 1983, this means that there are a record number of people out "there" who are not working and not looking for a job. That is, they are largely living off of the Government entitlement programs.  Another startling metric is the average duration of unemployment, which rose to a new record of 40.9 weeks, up from 39.4 weeks. 

More significantly, the BLS has a metric titled "Not in labor force."  This number increased from 86.07 million to 86.558 million, or a whopping 487,000.  So the Government is reporting to us that 487,000 people have decided that things are so good with their finances that they have decided to just stop working altogether.  I find this exceedingly hard to believe, especially since the supporting data that would support this metric show the complete opposite.  For instance, real wages have been plunging.  The point is, you would expect that more people would be looking for work, because the population is growing and people are earning less, on average, which would indicate to me that size of the real labor force should actually be growing, not shrinking.  Also on page 5 you will find "Duration of unemployment."   If you scroll down to page 6 in the link below you will see that average weekly earnings declined, as did average weekly hours worked.    These numbers are unequivocally not consistent with the positive jobs report that is being promoted in the headlines.  BLS - LINK

To sum it up, here's the truth that you will not see reported in your daily newspapers tomorrow or hear on your nightly local news, CNN, CNBC, Bloomberg or MSNBC:  There are less people working as a percentage of the total population, the total number of employed people as a percent of the population continues to decline, it's harder to find a job for those still looking, and those who do find a job are earning less - especially after factoring in inflation.  Sounds a bit different that the rosie headlines reported by the media and promoted on CNBC. 

Have a great weekend.  I am playing in my last tennis tournament this weekend as a USTA/NTRP 3.5-rated player, as I was bumped up to 4.0 by the NTRP.  I haven't decided if I will appeal this LOL.


  1. Great read as always Dave. I linked your piece on FG. Tennis? Geezus. I can barely walk up my stairs. I am guessing you don't play outside.

  2. (Dave)

    LOL. Thanks Brian. Indoor clay (har tru - the gray "kitty litter" clay) courts. Looks like it's going to be too cold to hit outside for at least a week.

  3. great read Dave, thank you.

    oh, how I miss the occasional tennis - colder in these parts for some time - a wannabe Pete Sampras without the killer serve, volley skills and one handed backhand :) But loved the exercise, sun shining down and every once in a while, a surprise Sampras backhand down the line that ignites the soul for the next round of unforced errors :)

    Looks like these central planners are painting a picture of a recovering economy (read: continued increase in money supply at a pretty good clip) and upcoming global QE. 2012 = the year inflation 'officially' takes off. Scary to think what it'll look like when decades of pent up/hidden inflation is upon us...but the cats coming out of the bag.

  4. Well just because you make a serfs wage doesn't mean your kids have to do without for xmas...just rent the fkin financial market parlance it's a toy swap...good times indeed for all???I wonder if this will impact retail sales? Stuffing channels will be renamed stuffing stockings!!!!!

    Parents Can Rent Toys At New Website
    “It’s the ideal situation for the holiday time,” Paul said. “You can stuff toys under the tree for under 50 bucks. If you were out there buying them, there’s just no way you could do that.”

    Paul and Pam choose the toys that are best suited for their son Will and just like Netflix, they go into a queue. Depending on the service plan, every month or every other month, a box comes in the mail with a new set of toys from the queue. When the time is up, send the toys back and a new box will be on its way.

  5. (Dave)

    LOL. Two-handed backhands are for wussies. I'm a lefty with a one-handed backhand and a decent serve, especially to the ad court.

  6. ha, yell that out to Nadal & Djokovic next time you see them live :) but yeah, it does look really wimpy :)

    I also have the Sampras/Graf one-handed slice backhand down...wimpy but much less wimpy than two-handers :)

  7. B Chilton CFTC (Text/Mails), CCC White Paper MF Gl Warehouse Certs

    Warren Edward Pollock (wepollock) goes into bulldog mode once again as he trades texts and emails with media darling CFTC's Bart Chilton. Warren likes to talk to the issue not the person so my words to Bart was to get away from the media and congress and to get himself into the bankruptcy court on our behalf.. I do believe he is one of the good guys, but using the corporate strategy of success at the cost of failure is not acceptable. I review that pending status of commodity certificates as either pooled or identifiable property. I talk about DSRO Designated SElf Regulatory Organizations and the idea of Fiduciaries where you are supposed to care for others assets in preference and in advance of your own interests. I mention a call pending front the COO of the CME. Also, I discuss the idea of leadership as a solutions point, where are the leaders? where are the executives? I mention the concept of a PUBLIC fiduciary which something the banks still do not get this day. I contrast accounting standards and application by Price Waterhouse to that of now defunct Arthur Anderson. I mention a 2005 article I wrote predicting this very thing... Where is FASB Financial Standards?

    For a tidy commission, Wall Street firms are happy to establish trust funds to organize, place, sell and administer asset-backed securities. In these instruments, your debt via a car loan represents someone else's asset. Behold the magic of creative credit. Individual car loans are no longer illiquid, nor limited by the constraint of a corporate balance sheet.
    The cash flow from any seemingly illiquid revenue stream can be monetized. Almost everything financial - tobacco settlements, future tax revenues, credit card balances, sovereign debt and spreads - can be packed up and sold.

  8. I'm glad it's Friday. Why? Because later on this afternoon the spot price of Gold and SIlver will remain stationary for about 48 hours. That's right, won't go up and won't go down. It kind 'a gives me a sense of satisfaction because it's the only time they can't manipulate it. I know they want to. I know they're trying to figure out a way to get in there and "play" with it, just to fuck with us during the weekend while we're busy being busy doing absolutely nothing with our lives, but for the time being, they can't. So, I sit back and find myself enjoying the special 48 hour period of down time.

    On the other hand, every time I look at that Kitco display with the spot price of the four metals I ask myself a couple of things like "Why in the hell do they have Platinum and Palladium in there? I mean, does anybody buy that shit? Why? It doesn't even look like a PM! I wouldn't be caught dead with it after a perceived collapse. Who'd buy it? How could one tell it from some other cheap scrap metal? No thanks. And, why have the little green and red arrow next to the price of the metal. At this point, who gives a fuck if it's green and Silver is up 14 cents. As long as Silver is below 50 bucks, it's DOWN. DOWN DOWN DOWN! Dump the green and red arrows, Kitco. Red (flowing blood out of my veins), if it's below $50 this year, and red if it's below $100 next year. Keep it simple. Nobody in their right mind cares about the insignificant daily "ups and downs". Anybody with a morsel of noggin knowingness is out of the paper markets anyway, right?

  9. The video is good...I think he's kind of optimistic.

    Kyle Bass Explains The New World Order - Panel Presentation
    On Greece:

    For those who think a 50% write-down on debt will fix Greece, you
    have lost your mind. It is only a full wipe-out of the
    non-TROIKA-owned debt that is the only mathematical way for Greece to
    have any chance.

    On the IMF and its role as global savior

    He discusses in some detail Keynes and the IMF formation and the
    new world order he foresees as our era of the largest peacetime
    accumulation of global debt has no precedent (as it has historically
    ended in conflict or been created by conflict).

    And how this debt saturation will inebitably play out:

    Fundamentally, its about the social fabric of the world...what
    does this all mean? It means war.

    And summarizing for every long-only talking head pitch-man:

    This is not a cyclical rebound from a crisis we had two years and
    you should NOT be buying stocks because a P/E ratio is low relative to
    historical S&P behavior because the E is wrong. We are going to see
    declines and people don't know how to position themselves for
    declines. We are at peak earnings now! Earnings only look good because
    if you take all the bad assets and put them on the public balance

  10. Hey Dave! Been awhaile since I left a comment, but I read every day. Have a great weekend.

  11. (Dave)

    Hey GYC! Found a great BBQ place here in Denver. You have a great weekend as well.

  12. Friday, December 2, 2011
    Confidence Is Frying, Subtle Hints Suggest Caution
    The financial system is highly interconnected. Unlike 2008, it won’t be so easy to engineer bailouts with public funds if the dominoes based on fictionalized balance sheets start falling again. Commentary: It's not 2008. Financial firms have no savior

    Unless MF clients are made whole in every way, the system is broken. It is as if the heads blew off the engine of finance. Where can you keep your money and investments if a clearinghouse is allowed for whatever reason to go broke leaving the clients to suffer. Are you safe even in a custodial account if the clearing mechanism can erase assets across the board as a product of insolvency for any reason. The system is a critical seizure.

    It may take some time, but even the financial sheeple are going to worry about their own funds. God help you if you hit gold right on a paper exchange with the wrong
    clearing facility. You are wholly dependent on the ability of the clearing house to pay into your account the winning by deducting those funds from the loser. You are wholly dependent on the ability of the clearing house to guarantee the safety and securities (are T Bills securities?) beyond SIPC levels.

    SIPC is underfunded but would be made whole by funny paper. God help all the Exchange Traded Funds that are nothing more than house of derivative paper requiring a sound clearing system to have even an excuse for existing.

  13. Someone said she was nuts...she's not

    A Powerful Interview with Ann Barnhardt

  14. I went to get myself a bag of Doritos and the $0.99 bag of air is now $1.09. Thank, Bernanke.

    Boycott the Fed and Frito Lay.

  15. MF Global customer: My entire account is missing

    (Reuters) - As investigators search for an estimated $1.2 billion missing from MF Global customer accounts, one customer says his entire account has vanished and blames the trustee liquidating the firm.

    An Illinois-based futures fund on Friday said its more than $50 million account with the broker-dealer unit of MF Global Holdings Ltd (MFGLQ.PK) is missing, and asked a federal bankruptcy judge to order the trustee to find it.

    Highridge Futures Fund LLP said the trustee James Giddens has refused to help locate its account with MF Global Inc, even after transferring some 38,000 other accounts and giving customers access to some of their collateral.

    Crony Reservoir Dogs ...Where did you transfer the account Mr. Green ? Offshore.....

  16. People better start asking themselves some pretty serious questions when protesters end up in jail and the true criminals are walking around in luxury!!!! That Ann Barnhardt interview is spot on ex a few points.

    Wake Up America!

    But here is something else that is alarming. The police state this country has turned into. I have brought out similarities to the old Soviet Union in the past but here is a comment left by a reader that makes some comparisons to a more modern non democratic republic in Russia.

  17. Too bad they don't include the cost of money in the cpi...guess the starbucks coffee that put you over had a higher price tag...???

    There's nothing easy about easy money.....

    3 December 2011

    UK banks charging as much as 800,000% on overdrafts

    By Ben Carter
    Reporter, Money Box

    Some High Street banks are charging "eye-watering" rates of interest when their customers go over their overdraft limit, research by Radio 4's Money Box programme has revealed.

    A customer borrowing £100 for 28 days without the consent of Santander would repay £200, for example.

    That is the equivalent annualised percentage rate, or APR, of 819,100%.

  18. No arrests, no protests...its Utopia...

    Wisconsin Gov. Wants Protesters To Pay For Security

    The Wisconsin State Capitol building has been the scene of protests since February, when Gov. Scott Walker started the process of passing a law that severely limits collective bargaining for public employees in the state.

    Yesterday, the Walker administration took a step that is likely to antagonize protesters further. His administration enacted new regulations that would require permits to protest at the Capitol and other state buildings.

    The controversial part is that the bill allows officials to charge groups for the security and clean-up costs of such events.

  19. I know he's liberal but tell me how this isn't working its way up the food chain after MF global?

    Bill Moyers Essay: Plutocracy and Democracy Don’t Mix

  20. I thought staffers were the creme de la creme but it looks more like scum that floats to the top....

    Is Crony Capitalism Wrong?

    Congressman Quigley's staffer called because he saw my quote in the Bloomberg article. He claimed he was looking for clarification of my position, and I stated the article accurately reflected my viewpoint. But the staffer seemed to me to defend the meeting.

    The staffer said this kind of meeting "happens all the time." I retorted, "Really? What's the excuse?"

    He then claimed he was just trying to play "devil's advocate." But don't we have a surplus of those?

    The staffer claimed that people want to discuss regulations with people who might be affected. I responded that this excuse is ludicrous. Then Secretary of the Treasury Paulson discussed material non-public information about the restructuring of Fannie Mae and Freddie Mac with people who were in a position to profit at the expense of the public. I cut the phone call short at that point.

    I would like to give my local politician the benefit of the doubt that a staffer wasn't acting as an errand boy trying to send a message, but that phone call didn't give me much to work with. It seems that whether it's Henry Paulson working for a Republican administration or a Democratic errand boy doing apparent damage control, it looks as if we're steeped in bi-partisan sleaze. If the staffer was merely playing the fool, then U.S. citizens needn't suffer them gladly.

  21. Currency swaps – the beginning of a 'solution'?

    The obvious way to deal with sovereign debt will be through the
    International Monetary Fund, perhaps issuing SDRs (Special Drawing
    Rights). The SDR was created by the IMF in 1969 to support the Bretton
    Woods system of fixed exchange rates, a function that was swept away
    by events. According to the IMF, the SDR is not a currency, but a
    claim on “the freely used currencies of IMF members”. So if an SDR
    facility is extended to Italy, for example, the SDR can be cashed in
    for the underlying currencies and converted into euros. The facility
    is sitting there unused.

    If the SDR route is taken, governments such as Italy would become net
    buyers of euros, generating a bear-squeeze in both the euro and
    government bonds bringing yields down smartly. Market-aware central
    planners love this sort of thing, because they can force the switch in
    market sentiment from extreme pessimism to do much of their work for

    So far, so good; but to anyone with a grasp of the economics of sound
    money, the encashment of SDRs is raw monetary inflation. But with the
    economic establishment and the general public happy to accept
    quantitative easing as a responsible economic policy, despite its
    ultra-thin cover for monetary inflation, it is unlikely the
    inflationary aspects of SDRs will be understood. Instead, the media
    will praise the benefits of international co-operation to resolve the
    sovereign debt problem, selling the concept as a way to counteract
    contracting bank credit to prevent deflation.

  22. How many people can they buy off?hmmm...that's a very good question!

    60 Minutes: PROSECUTION Is Overdue

  23. Exclusive – Mark Cutifani CEO of $16B AngloGold Ashanti: “Major Buyers Are Finding It’s Hard To Get Physical Gold”

    What I thought was the most fascinating of Mark’s comments during the interview, was his observations of major gold buyers emerging from the Middle East & Asia. “People are coming directly to us,” for large gold purchases he said. “People who want tonnes of physical gold, people with serious financial muscle…because they’re finding it’s very difficult to secure the volume of gold they want…That’s something we’ve noticed over the last 18 months, and it’s been increasing in the last 6 months. I think people are finding its hard to get physical gold.”

    gold etf~ "Men prefer a false promise to a flat refusal."
    -Quintus Cicero