Friday, September 7, 2012

Friday Comedy - Obama Show

I buy every month, and I will never, ever sell it as long as people such as Mitt Romney, Paul Ryan, Obama, Biden, Bernanke, and Geithner are in government.  I will never sell it.  Never.  - Marc Faber, Swiss Investor, King World News
I couldn't let the monthly Non-Farm Payroll Report go by without shooting it down, however an easy target it may be.  It's easier than shooting fish in a barrel, really.   At first blush on the headlines, in which the supposed number of jobs gained, 96k, badly missed the consensus expectation by 29k, I was shocked that Obama would let the BLS release a number that was that bad on the heels of his big teleprompter reading last night.  But then the unemployment rate crossed that tape at 8.1% vs. 8.3% last month and 8.3% expected.  It then occurred to me that it was a perfect number for Obama.

Perfect because the supposed jobs "growth" is slow enough to justify a lot more economic stimulus - at least from a political standpoint, certainly not from a law of economics standpoint - and the supposed decline in unemployment rate is the perfect marketing device for Obama.  Now, we know there's no such thing as a free lunch, but our Ministry of Truth (Bureau of Labor Statistics) has written a free lunch script that will be heartily consumed by many.  It so closely follows the Orwellian script, laid out by George (Eric A. Blair) in the late 1940's, that it's frightening how prophetically accurate his vision was.

Let me shed some truth on the numbers, at least on the statistical vomit thrown at us by the Obama Team.  I say this because the data sampling and mathematical calculations used to produce the report are largely accepted as being wildly inaccurate by most who have studied them with an eye for truth and accuracy rather than the goal of public perception management.

The headline number was 96k jobs added in August.  Supposedly 103k private sector jobs were added vs. 142k expected.  Of that, 87k came from the nefariously fraudulent "birth/death" model.  The durable goods manufacturing sector actually lost 17k jobs.  The number of people employed in residential construction jobs is down 20k from August 2011.  Do you really believe the reports that the housing market has bottomed?  Really?

The unemployment rate supposedly dropped to 8.1% from 8.3%.  But remember, this number is calculated using the Government's very narrow definition of "those looking for a job" divided by the total workforce.  If you can make the numerator decrease relative to the size of the denominator, or vice versa, you can statistically engineer a lower unemployment rate.  Follow that?  Here's how Team Obama engineered a lower unemployment rate:   They claim that the civilian employment workforce (the denominator) declined in size by .2%;  however, they decided that the number of unemployed declined by 2%.  Voila!  A smaller numerator relative to the change in size of the denominator!

All of the hypothetical action in the employment numbers can be found here:  LINK  The saddest part of this is that the casualty in these calculations - a casualty of which zero reporting is done by the mainstream media - is the labor force participation rate, which is the number of people working or want work as a percent of the definitional workforce.  This metric declined to 63.5% - the portrait of a tragic and catastrophic decline in the number of people who actually work in this country.

Where do the rest go?  Well, in the context of all the entitlement programs run by the Government and financed by the Taxpayers, the Chinese and the Japanese, 165 million people in this country are to some degree dependent on Government handouts to make ends meet:  LINK  Last month under Obama's stewardship, food stamp usage spiked up to a new record:  LINK  Did Barack happen to mention that metric in his full-of-bullshit speech last night?  I've discussed the Social Security disability program on this blog.  The number of people, and especially younger people, claiming disability and sponging off this program has climbed significantly under Obama.  I'm dead serious about this, about all you have to do is claim chronic head-aches that prevent you from working and you can qualify.  And I know a doctor who tells me new medicaid horror stories every time I see him.  Did Obama happen to mention that?  Finally, this one really blew my mind:  the Government announced recently that it will be giving $100 million to States in order to prevent State Governments from laying off employees:  LINK   Ummm, did Obama happen to mention that? Talk about getting paid not to work...I guess these facts didn't scroll across his teleprompter.  

The reason Obama has ramped up the entitlement programs and Student Loan lending is that any new recipient of something like social security disability or a SLMA guaranteed student loan immediately gets dropped from the Labor Force metric. The amount of SLMA loans has soared to $1 trillion during the last 4 years.  This will be more defaulted debt guaranteed by the Government.  These programs enable the Government to somewhat justify showing a smaller number of unemployed and a lower unemployment rate.  The rest is statistical fairy tales told with a very Orwellian spin.  Even the Government's own U-6 report, buried in the BLS report, admits to a more realistic unemployment number of 14.7%  Newspapers and cable news shows will not report this number.  Given the bulge in the various entitlement program participation, I would bet the true unemployment number is north of 20%.   As many know, John Williams (Shadow Statistics), calculates an alternative unemployment number which is north of 20%.

The truth is that it doesn't matter whether a Republican or Democrat sits in the Oval Office. They are both the same Manchurian Candidate with a slightly different "spin" coming from the text they read off the teleprompter sitting in front of them. The only way to solve the problem is with a gold-backed currency system and a complete econmic/financial "reset." A "reset" is coming - it's just a matter of what it looks like and how violent it gets. That's the ulitmate end of this story. Until then, the only way to have a shot at seeing what the other side of this "reset" looks like with a full belly is to move as much of your paper wealth as possible into physical gold/silver (and get a gun).

Have a great weekend, it's the start of NFL football!!!!



  1. Here is my own, more modest take on the Jobs Report.

    1. Slummin' it today? You sound like someone who started their education at Oberlin College and finished up at like Carnegie Mellon or M.I.T....

  2. Abbot & Costello discuss unemployment-

    1. Capitalism is Great, but Our Corrupted, Bastardized, Crony Capitalist System Stinks; It's Rigged

      Woody Brock on the state of our capitalism: Under true capitalism, no agent has any bargaining power whatsoever. The notion of 4 investment bankers taking a private plane to Washington to make sure that leverage would be tripled in April 2004 in exchange for some nice payments, is outrageous and scandalous and they all should be in jail. Adam Smith wouldn't roll in his grave; he would gyrate.

  3. Perhaps the prescience ascribed to Orwell should be turned on its head, which is to say that perhaps the powers-that-be are using his masterpiece book, 1984, as a "how to" guide with regards to how the world should be ordered (it certainly would explain a lot).

    On the subject of gold and guns, does this fit the bill?

  4. Greetings from Denmark, a smallish country in the North of Europe, not doing as bad as the rest of them. I follow this blog with delight, and having been a subscriber to Marc Fabers newsletter for a couple of years - I am fully in on the idea of metal ownership. In this country, we can buy physical gold free of VAT as an investment, but when buying silver we have to pay VAT, because apparantly its a usable commodity. The VAT issue destroys the idea of holding physical silver (VAT is 25% NO TYPO, TWENTYFIVE PERCENT) , but I believe that the imminent major correction is worth having a stake in. Anyone in here have any thoughts on "iShares Silver Trust (SLV)" they would like to share? In case of a complete system breakdown, obviously, paper assets like this are worthless, but in terms cashing a bit of money on the general public beginning to realize the volatility of the FIAT system maybe this could be a way of gaining a profit, cashing in and buying more VAT free gold. I would love to hear the opinion on this by readers of this blog.
    And thanks for valuable and entertaining information on the subject.

    Best Regards


    1. Hi Mikkel. Can you buy silver outside of Denmark and bring it back, thereby avoiding the VAT? At today's prices, even if you have to pay the VAT, you are still buying silver at a gold/silver ratio of 41. At the top the last bull move, (gold 1900, silver 50), the gold/silver ratio was 38. Many of us believe we'll see at GSR below the the long term (like 1000 years) ratio of 16. Even if the GSR regresses to only 20, you will still outperform with silver by 200% when you buy silver with the VAT now instead of gold.

      Silver is a monetary metal. It's a currency. If the U.S. Government abided by the Constitution, silver would still be a mandatory currency.

      You are buying the metals primarily for their value as stable currencies. They are undervalued in that capacity right now and therefore make great investments as well. But stay away from the paper ETFs unless you are using them make short term "indexing" plays. One of these days, SIL will be exposed for the fraud that it is.

      Read this, which is wrote in early 2009 - the same principles apply to SIL:

      Thanks for reading my blog and make sure you pass it around to your friends and colleagues.


  5. What a lovely image. i love it.!!!!!

  6. with apologies to Nikolai Kondratieff September 10, 2012

    Here are some observations on why most status quo institutional investment managers are destined to fail during the latter part of Kondratieff Winter which could last for another 10 to 15 years.

    In January 2002, after observing that we were moving into an era of ‘extend and pretend’, I determined that the time was right, within the Kondratieff Long Wave Cycle to have a Gold Bullion allocation in one’s portfolio. Gold was $280 (U.S.) an Ounce at the time. Having returned to Ottawa in July 2002, I monotonously emphasized the case for owning Gold Bullion to Canadian institutional investors. They either ridiculed my rationale or didn’t pay the faintest bit of attention. Meanwhile, the evidence at $300 (U.S.) an Ounce was staring them in the face but now, at $1730 (U.S.) an Ounce, the logic should be banging them on the head.

  7. Hi Mikkel,

    I know what you mean. In Holland (where I live) we have 21% VAT on silver. Still I managed to accumulate silver for less VAT. Here in Holland we can buy old silver Guilders for 1-2% over spot (72% silver content). You can sell it for around 5% below spot. For me this is for barter if all fails so I wont sell it. You can also go to Germany for a holliday trip. VAT on silver there is 7%. Free holliday and silver :). We Dutch can move up to 10.000 Euro without having to declare it to customs.

    In antique shops you can also buy lots of sterling silver (92.5% pure). I found that you can get some strange looks when you have a scale with you but some pieces go for around spot and its nice to look at. What I also do is going to flee markets. Fun day out (for me anyway) and you can get great bargains. This spring I bought around 1.5 kilo old silver forks, knifes etc for a whopping 95 Euro.

    Coinshops here dont have to pay lots of VAT on 2nd+ hand coins. They are very hard to find but if you get a good bond with the coin dealer (always handy) you can sometimes get a good deal on a damaged pure silver coin.

    For a person of small net worth it worked wonders so far for me. I find it a shame I cant just buy pure silver coins, bars etc. But at least I have silver and didnt feed the beast with that horrible VAT on real money.

    I do ofcourse also buy gold. To put the reason for VAT free gold in a historic perspective here some things from a while back (break down of Bretton Woods). Never forget, the ECB marks it gold to market each quarter of the year. Thats why they want you to buy gold and wont tax it (even though Denmark isnt part of the Euro). From discussions between Kissinger (K) and Ender (E) (hat tip

    to be continued....

  8. continued

    ''K: Why are we so eager to get gold out of the system?... Why
    is it against our interests to have gold in the system?

    E: It is against our interest to have gold in the system because
    for it to remain there it would result in it being evaluated
    periodically. Although we still have some substantial gold
    holdings - about 11 billion - a larger part of the official gold
    in the world is concentrated in Western Europe. This gives them
    the DOMINANT POSITION in WORLD RESERVES and the dominant
    means of CREATING reserves. We've been trying to get away
    from that into a system in which We can control.....

    K: But that's a balance of payments problem...

    E: Yes, but it's a question of who has the most leverage
    internationally. If THEY have the reserve creating instrument
    by having the largest amount of gold, and the ability to "change
    its' price" periodically, they have a position relative to ours of
    considerable power. For a long time we had a position
    relative to theirs of considerable power "because we could change
    gold almost at will".** This is no longer possible, no longer
    acceptable. Therefore, we have gone to special drawing rights,
    which is also equitable, blah blah blah. (So the MTM idea was
    already understood in 1974,eh)''


    Secretary Kissinger: Have you accepted it or is this just a French proposal?

    Mr. Enders: It's an informal consensus that they've reached among themselves.

    Secretary Kissinger: Were they discussed with us at all?

    Mr. Enders: Not in a systematic way. They're proposing to send over to Washington the Dutch Finance Minister and the Dutch Central Governor would talk to the Treasury.

    Secretary Kissinger: What's Arthur Burns' view?

    Mr. Enders: Arthur Burns—I talked to him last night on it, and he didn't define a general view yet. He was unwilling to do so. He said he wanted to look more closely on the proposal. Henry Wallich, the international affairs man, this morning indicated he would probably adopt the traditional position that we should be for phasing gold out of the international monetary system; but he wanted to have another look at it. So Henry Wallich indicated that they would probably come down opposing this. But he was not prepared to do so until he got a further look at it.

    Secretary Kissinger: But the practical consequence of this is to revalue their gold supply.

    Mr. Enders: Precisely.

    Secretary Kissinger: Their gold reserves.

    Mr. Enders: That's right. And it would be followed quite closely by a proposal within a year to have an official price of gold—

    Secretary Kissinger: It doesn't make any difference anyway. If they pass gold at the market price, that in effect establishes a new official price.

    to be continued

  9. Malone’s Starz Sells Bonds Lacking Protection: Corporate Finance
    Starz LLC, the movie channel provider owned by billionaire John Malone’s Liberty Media Corp., is pouncing on unprecedented demand for junk bonds to sell $500 million of notes that lack standard bondholder protections.

    Documents governing the terms of the debt are “flawed” and “highly off-market,” according to research firm Covenant Review LLC, putting bondholders in danger of being subordinated by new obligations or left without recourse if the company sells assets. Starz issued the debentures to facilitate a $1.8 billion dividend to Englewood, Colorado-based Liberty Media as part of a transition to becoming a publicly-traded company.

    Starz officials “can send money out of the company without the company ever earning a cent,” diminishing the cash available to meet interest payments, he said.

    Malone is known for using complex tracking stocks and financial transactions to pursue tax benefits and make his companies and assets more attractive.

    who buys this garbage?