Tuesday, October 9, 2012

Will The Real Unemployment Rate Please Step Forward?

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. - Joseph Goebbels, Hitler's Minister of Propaganda
Last Friday's non-farm payroll report and the supposed decline in the reported unemployment rate to 7.8% stirred up quite a debate in media over whether or not the number was artificially manipulated lower for Obama's political benefit.  I have detailed extensively in previous posts, with plenty of data to back it up, the assertion that the employment report is heavily manipulated.  Much of it comes directly from the BLS website.  What I found quite strikingly obvious is that not one media outlet defending the report - Bloomberg, CNN, MSNBC, CNBC, Fox News - ever presented any data to back-up their defense.  It's kind of like Obama and Romney tossing out their "programs" to solve our problems without ever detailing how they'll accomplish their platitudinous political promises.

To summarize the situation regarding whether or not the BLS manipulates its economic data, here's a quote from John Williams' Shadow Statistics report.  John Williams has been tracking and analyzing Government economic statistics for several decades.  I doubt there's anyone outside of the BLS brain trust who knows more about how and where the numbers are manipulated:
The August-to-September change in the headline unemployment rate almost certainly was not a 0.3% decline.  The Bureau of Labor Statistics (BLS) knows the reported change in unemployment was wrong—other than by extreme coincidence—and it knows what consistent reporting actually showed.  Only politics prevents the BLS from releasing the correct number, whether the unemployment rate actually declined, held even, or rose as predicted by consensus forecasters.  The lack of transparency here in the data preparation allows for direct political manipulation.
If you are interested in his detailed analysis, you can subscribe to his reports HERE  If you have never read his work but are curious about the truth, it's worth subscribing.

As always, the golden truth lies in "following the money."  While common sense, combined with Williams' excruciating analysis of the data, suggests the headline-reported unemployment is total bullshit, the pay-off is always about money.  Show me the money!  It just so happens that Bill King, who publishes his daily "The King Report," presented a dollars and sense analysis which confirms that the unemployment report was fictitious, a Goebbelian lie.

Because The King Report is also a subscription service, I will provide a summary of his "follow the money" findings.  Mr. King did the logical thing and looked at payroll tax receipts for September and compared them to August.  One would expect that if the economy generated the number of jobs claimed in the September employment report, the Treasury would have collected more payroll tax receipts, right?  It turns out that the payroll tax receipts for September declined by $2.2 billion.  How can that be?

He also looks at year-to-date FICA witholdings (Social Security tax).  Presumably, if the economy has generated the number jobs this year, as claimed by the Government, we would expect an increase in FICA witholdings for 2012 vs. 2011.  As it turns out, FICA witholdings through the end of August 2012 are $7.2 billion lower than for the same period in 2011.  Could Steve Liesman on CNBC please explain that one?

Finally, and this one is my favorite, Mr. King puts the nefarious Birth/Death model assumption to the test of money.  For the September employment report, the Government number includes the addition of 546,000 new jobs from the formation of new businesses.  These would be you mom and pop small local businesses.  To test that, we would expect to see a large increase in "self-employment taxes" per the Self-Employment Contributions and Federal Disability Tax Acts.  As it turns out, self-emploment tax contributions year to date are lower in 2012 than for 2011. If you are interested in looking at the Treasury data Mr. King analyzed, the link is here:  LINK
One more point, consumer spending slowed down considerably in September.  Wouldn't it seem logical if the economy were producing a large number of jobs that, on a macro level, consumer spending should be increasing along with what should be a larger "pool" of personal income?

There is no question in my mind that the Government egregiously manipulates the major economic reports for political purposes.  I have been reading and researching this for over 10 years now.  As I stated before, the analysts who report the manipulation back everything up with extensive and detailed analysis.  Those who report and defend the Government back up their claim with empty rhetoric.  I'll leave it to you to further investigate and decide if the Government is lying or if the analysts who back up "manipulation" assertions with actual proof - statistical and monetary - are black helicopter conspiracy theorists, as they've been called by Bloomberg and others in the media.


  1. Mish has an interesting post blaming Obamacare for dislocations in the workforce employment numbers. For those who haven't seen it yet link here:


  2. Hey Dave! have a great day


    Il Folletto

  3. Thank you Thank You THANK YOU Dave for pointing out this vital fact that if jobs were increasing then taxes taken in would be increasing too.

    How embarrassing it is for the data from one government entity (IRS) to show the lying being done by another government agency (BLS).
    BLS=BS? Sounds about right.

  4. I think you should post this under the humour section.

    Mr Wheatley, who last week recommended that bankers who attempt to manipulate Libor face criminal prosecution, pledged to investigate and expose potential abuses in other sectors of the financial-services industry.

    That could include the gold and silver markets, oil, foreign exchange and even agricultural commodities. "We will shine a light into a number of dark corners and we will have to take action depending on what we find,"

  5. What is your opinion of AUMN trading with a market cap of 175mm?

    A 1 billion market cap would be a 6 bagger from here. Perhaps I'm losing my mind but is this not just a no brainer BUY at this valuation?

    1. Their quarterly results should be out soon. I'll be interested to see what kind of cash flow they're throwing off. They won't need money for quite some time, which is a huge plus. It is very cheap, especially in the context of silver moving back $50. The leverage to the price of silver is just tremendous.

  6. EMXX had quite the day today. By my quick look it traded ~3x the previous all time daily dollar volume high. Similar to the Russian PR a month ago, I have to think this is another case of front running news. If it's news and for fun, I put my money on a AUS JV or a strong drill intercept from the Freeport property in AZ.

    Interested to hear if you had any thoughts.

  7. I know neither Presidential candidate mentioned their plans during the debate but they both do have plans. I wrote an article on each of them on my blog. As of right now I have less information on Govenor Romney than I do on President Obama since Mr. Romney has never been President. I will update my Romney post by Sunday.

    ...As for the 12 million jobs pledge... Mr. Romney's plan is to do absolutely nothing and go down in history as the greatest president ever. Moody’s Analytics, in an August forecast, predicts 12 million jobs will be created by 2016, no matter who is president. Macroeconomic Advisors in April also predicted a gain of 12.3 million jobs. Presidents are often at the mercy — or are the beneficiary — of broad economic trends, and Romney’s pledge appears to be an effort to take advantage of that.

  8. What is Carlos Slim up to....buying more ounces in the ground???


    Thx for your write up.

    The point to all this is that nothing is trustworthy anymore - absolutely nada, because with absolutely every information piece there is an ulterior motive. Information is the new artillery of the new age war. It was used before for propaganda but didn't travel as fast as the old bullet. That has changed now.

  9. I have a question and perhaps someone more qualified could look into this...

    I am looking at the very useful Gold/CRB ratio produced by screwtape files -

    The way I understand this graph is that it shows Gold relative to other commodities. This stayed constant till about end 2005 and then Gold started outpacing the other commodities????

    But yet - looking at the HUI long term "King Daddy" -


    We notice that the HUI did very well while the ratio stayed constant but didn't show, up to now, the reaction to the favourable, increasing Gold/CRB ratio. That ratio is in an uptrend but yet many use the notion that commodity costs are outpacing the rise in Gold and hence Miners are not reacting. This obviously doesn't include all costs - like labour.

    So if we draw a graph of the composite ratio between the HUI and the Gold/CRB ratio we see Gold Miners are lagging ever further behind. And we are now back to about April 02 composite ratio where the HUI was roughly 155 and the Gold/CRB ratio at about 1.40. This gives you a composite ratio of about 110.7. And today's composite ratio of HUI/(Gold/CRB) is 500 / 5 - so 100.

    So a quick test shows the HUI was performing best relative to this ratio in around April 06 at roughly 229.5. Using this ratio with today's Gold/CRB ratio of roughly 5 should give us a HUI of 1147.5

    Ah well - the world is upside down!

    Appreciate some comments.

  10. How Monetary Policy Threatens Savings
    Central banks are currently flooding cash-strapped industrialized nations with money. This may help governments reduce their debt load, but it also erodes the value of people's savings. A massive redistribution of wealth is threatening to take place in Germany and Europe -- from the bottom to the top.

    Germany's central bank, the Bundesbank, has established a museum devoted to money next to its headquarters in Frankfurt. It includes displays of Brutus coins from the Roman era to commemorate the murder of Julius Caesar, as well as a 14th-century Chinese kuan banknote. There is one central message that the country's monetary watchdogs seek to convey with the exhibit: Only stable money is good money. And confidence is needed in order to create that good money.

    The confidence of visitors, however, is seriously shaken in the museum shop, just before the exit, where, for €8.95 ($11.65) they can buy a quarter of a million euros, shredded into tiny pieces and sealed into plastic. It's meant as a gag gift, but the sight of this stack of colorful bits of currency could lead some to arrive at a simple and disturbing conclusion: A banknote is essentially nothing more than a piece of printed paper.

    It has been years since Germans harbored the kind of substantial doubts about the value of their currency that they have today in the midst of the debt crisis. A poll conducted in September by Faktenkontor, a consulting company, and the market research firm Toluna, found that one in four Germans is already trying to protect his or her assets from the threat of inflation by investing in material assets, for example.


  11. Mmmmmhhh - this is exactly why the Fed is still financing the Bear Sterns Silver shorts and the CFTC will never ever BE something...


    JPM did the Fed a Favor buying Bear Sterns - J Dimon. He is now as idiotic as Goldman's GOD.

    They don't feel enough love and that's why JPM is giving Silver the big shaft - to show everyone who needs to be loved and revered.

  12. Mmmmmh - is the BOE going to start buying "back" its Gold. I'm a little surprised that this article is not yet getting a lot of attention. I find it rather important and a corner stone for Gold. The debate is going higher and higher. First the acceptance of Gold as collatoral then the tier 1 story and now a "white paper" for the BOE - Reform of the International Monetary and Financial System - in which it discusses amongst others Gold vs Fiat.


    This should really be big big news and yet we concentrate on where the dollar index is going today.

  13. They cleverly devised a system which made lying, cheating and stealing the honorable thing to do.
    (I liked Jesse's subtle reference to Dimon last night).
    Money what have you done ?? dumb, dumb ... it's the sound of my gun
    Jamie' got a gun
    Jamie' got a gun
    His whole world's come undone
    From lookin' straight at the sun
    What did his Bennie do?
    What did he put you through?
    They say when Jamie is arrested ....
    (Hah, that'll be the day)

    1. Breakdown in the Short-Term - Atlas Shrugged

      How things are connected, and become disconnected, are at near-term risk. Integration has become so pervasive we now rely on connections in a single string of failure.


  14. Max Keiser talks to Jon Najarian

    In the second half of the show, Max Keiser talks to Jon Najarian about options trading, high frequency trading and naked short selling.


    The Big Picture Conference Finale: Sal Arnuk and Scott Patterson on High Frequency Trading
    HFT is a form of gaming/skimming the market. It is predatory. It creates risks for the market.

    Since the flash crash over $300bn has left US equity markets. HFT is now going into currencies and bonds worldwide.

    We got lucky with the flash crash. It could have been much bigger and the next one will likely be disastrous.

    Scott Patterson: Began looking into GETCO, which was very hesitant to even meet with him. May 6, 2010 flash crash was the result of HFT companies pulling out.

    The market maker scheme is driving the entire US stock market, and is being enabled by the exchanges.

    The SEC may be waking up to this issue. Patterson has been putting this on the front page of the WSJ. Hopefully this will put sufficient pressure on the SEC to act.


    Jim Sinclair’s Commentary

    To be right and very patient is the key to making major money in this financial world when playing it straight.

    Stealing is the more popular way now used by the Western world financial entities, used by almost every one of them.

    To know how to wait. It is the great secret to success.
    –Joseph de Maistre

  15. The root cause of poverty which is unemployment should be dealt with strictly. Persons in authority should state he real status rate of unemployment.