More "BS" From The BLS

The media will no doubt grab onto today's jobless claims report as more evidence that the economy is improving.  But recall that Bernanke stated clearly yesterday that  high unemployment is going to persist for a long time.  Also, not widely reported, is that for the second month in a row it was reported yesterday that job openings in December were lower again and that the metric fell to its lowest level since September.  Not only that, but the number of employees hired also declined.  Here's the report: LINK

So todays lower-than-expected jobless claims report has to be greeted with a high degree of skepticism and a real desire to see exactly how the Government creates its "seasonal" adjustments.  I guess there could be a high correlation between new claim filings and the bad snow storms hitting a large part of the country.  But shouldn't there be "adjustments" to normalize for that? 

And actually, on an "unadjusted" basis, the number of claims actually were about 20k higher than expected. Even more troublesome, and something that will absolutely not be reported in most daily newspapers or local news broadcasts, was the fact that the number of claims for extended benefits - these are the people who are on the 2 1/2 year benefit roll (aka welfare) - increased by over 100,000 to 9.4 million.  Let's put this number in perspective.  The BLS reported that the labor force was around 63 million.  With 9.4 million of those receiving jobless bennies, this means that a full 15% of the "labor force" is essentially part of the welfare expenditures.  Here's the full report:  LINK

Also not widely pointed out was the fact that Obama has proposed a moratorium on interest payments for States which have had to borrow from the Federal Govt (that means you, the Taxpayer) in order to fund State unemployment benefit programs.  IF this proposal becomes a reality, and States like California stop making payments to you and me, collectively the Taxpayers, how is this any different than a de facto debt default?  This is indeed a default because it means that these States had the choice of not making payments under Federal claims OR not making payments to ALL creditors, including municipal bond holders like Pimco.  THIS WILL BE A DEBT DEFAULT.

The only difference between this and a default is that Obama, on behalf of Us, has the authority to propose and legislate a "deferral, thereby technically circumventing a legal default.  Of course, you can refer to money printing as "quantitative easing" so that it appears to be something other than that which it really is.  And you can call "stronzata" a "rose," but it will still smell like stronzata.

It's getting worse by the day, not better like Bernanke and Obama and the media would have you believe.  The reports of silver and gold bullion shortages in Australia, Asia, Europe and Canada are now proliferating and have a high degree of credibility, especially as reflected in the soaring lease rate for silver.  This tells me that the rest of the world smells the stronzata eminating from Washington, DC and Wall Street...

This Statement From Obama Is RIGHT Out Of "Atlas Shrugged"

Obama Urges U.S. Business Leaders to Increase Spending for Good of Country

Recall that in "Atlas Shrugged," Ayn Rand lays out a vision in which the Government takes control the avenues commerce, first by trying to impose its will on private enterprise and then, ultimately, seizing complete control.

I have been saying all along that what is unfolding right now economically, politically, socially and morally in this country fits Rand's vision (and Orwell's in "Animal Farm") like a fine leather Hermes dress glove: 

President Barack Obama joined patriotism with economics as he urged U.S. business leaders to “get in the game” in support of their country by spending more cash.

The fact of the matter is that spending cash for the sake of spending cash will not benefit anyone. The Government will borrow at least 4.1 billion per day this year to spend money for the sake of keeping its massive bureaucracy and egregiously wasteful programs in place - to the benefit of no one, other than the Government employees who are kept employed and overpaid by this spending and the businesses who control how the Government spends its money.  THAT is right out of "Atlas Shrugged."

Here's the news story from Bloomberg:  LINK.  Read and weep for our country...And then go buy more gold and silver!

Must-Watch Interview With David Stockman From CNBC

"When the Fed stops buying, who's going to these [Treasury] bonds?"

David Stockman was the Director of the OMB during Reagan's first term.  Even back then he was known as a crusader against deficit spending and the accumulation of Government debt.  My estimation of him was raised considerably when he recently was highly critical of Reagonomics and the extension of the Bush tax cuts:  "We're simply deferring massive taxes unfairly and immorally putting huge debt burdens on future generations and that is just wrong."  Stockman supported the tax cuts under Reagan, but ONLY if they were accompanied by a commensurate amount of spending cuts.  They were not...

He was on CNBC Friday for his take on the jobs report:  Re CNBC's reporting on the employement report:  "I heard more spin-control when I came out this morning than I ever heard in the White House."

On the fraudulently constructed unemployment rate metric of 9%:  "if we had the same [labor force] participation rate this January that we had a year ago...the unemployment rate reported this morning would have been 9.9% rather than 9...the 103.2mm jobs that were in the economy reported this morning is a number that was first reached in October 1999." Thus there's been no net job creation over the last 12 years.

And on the Fed money-printing policy:  The Fed policy is (so) dangerous. They say they are printing money like there's no tomorrow...to somehow stimulate jobs when it's pretty clear that the only thing that's happening is that all of these new high-powered reserves are flowing into the world economy creating the most vicious commodity hyperinflation"

Here's is the segment, which starts around the 3 min mark.  Unfortunatey Faber and the other douchebag on CNBC cut-off Stockman several times while he's making some insightful comments, but this is worth watching:

Pre-Weekend Comments...

Another lazy Friday today.  The post-NFP excitement in the markets dissipated pretty quickly and now it's back to business as usual for the usual smoke-blowers.  I don't have much to add to the commentary put out by my friend and colleague "Jesse" on the employment report.  You've likely already read his wisdom and insight but, if not, the link is HERE 

I will dress that up with a few facts that can be found if you bother to read the actual BLS report, which is HERE.  Briefly:  the labor force participation rate dropped to a 26 yr. low.  This is the pool of humans that the Govt determines to either be working or not working but actively looking for a job.  The reason the unemployment rate dropped to 9% is because the Govt cut 504,000 people out of their labor force calculation.  It's an absolute farce because what it tells us is that there's really no hope for many of these people to ever find work in this country.  On a not seasonally adjusted basis, the more comprehensive U-6 report showed an unemployment rate of 17.3%.  That's a lot closer to the truth but still low according the work done by John Williams on the matter.  I guess the most remarkable aspect of today's huge miss vs. expectations is the fact that the number diverged so much from the much-cheered ADP employment report released earlier this week.  Both ADP and the BLS use a very similar method of calculating (note: massaging) the data and calculating their cesspoolified number. 

Remember, it's the BLS - leave the "L" out for the truth about what it really is and what the people who work there are full of...

Please read this comment published last night on inflation and gold by James Turk linked HERE.  I've said this before and I'll say it now:  In 10 years of doing exclusively the precious metals sector and analyzing the truth about our system, I respect James Turk's writing and analysis as much as anyone's out there.

Finally, here's the Friday tune from Charles "Mad Dog" Sheffield, a little-known musician from the Louisiana creole blues movement which proliferated when this country really was great:



Avete un divertimento fine settimana ognuno! (Have a fun weekend everyone!)

Bernanke Either Is Smoking Some Strong Weed Or Is A Malicious Liar

"History repeats itself, first as tragedy, second as farce" - Karl Marx

I don't think it's any coincidence that today's spike in gold coincided with Bernanke's smoke-blowing session in front of the National Press Club.  What is really sad and pathetic is that most of the country that bothers to read/follow the news will wake up tomorrow morning to headlines which proclaim that Bernanke said the economy is improving.  BUT, if you look at the real TRUTH behind the economic numbers released lately, you will see that the indices used to measure economic activity have been skewed to the upside primarily by price inflation at the "non-core" level, where "non-core" as defined by the Fed/Govt is "the cost of food and energy."  Yes, 'tis indeed a massive farce.

Let's use today's factory orders report as an example, which posted a .2% gain vs. an expected .4% decline. If you read thru the details of the report, which you can do HERE, you will find that the index gains were driven primarily by an increase in the output of non-durable goods and inventory build-up.  If you read thru the data table, you'll find that "petroleum and coal products" were nearly 15% of the total value of the index and represented one of the largest % increase in value from Nov to Dec.  Given that we know that the price of oil increased during November by almost 13%, it stands to reason that a large percentage of the gain in the factor order index was the price of oil (and coal).  Furthermore, the price of steel has been climbing sharply, ergo the increase in the value of the durable goods component of the index. 

Given that new orders for durables were down, and unfilled orders also declined (meaning there was plenty of inventory to fill orders) AND that inventories continued to grow during the month, end user unit demand was flat to down. Thus, the increase in the value of many of the components of the factory order index would have been derived from price increases.  Analysts should be quite troubled by the fact that inventories continue building with little evidence of ultimate end-user (consumers, ultimately) demand.  We saw more evidence of this dynamic with the auto sales report, which was largely driven by a massive spike in GM sales, but which proved to be largely a function of GM selling cars to dealers, as dealer inventory exploded month over month.  There is an excellent accounting of that dynamic HERE.

Anybody read about, or hear/see, any of the above in their local newspaper or nightly news broadcast?  How about the geniuses in CNN or CNBC or Fox Biz?  Did any of those news sources go over this?

There's more.  The Purchasing Manager's Index reported the other day showed an unexpected increase.  But you'll find, if you read thru the details of the report, that one of the largest - by far - components in the increase of this index came from a large increase in prices.  Not only that, but that the trend in higher prices has sustained for 19 months.  To further bolster the lack of end-user (consumer) real demand, the customer inventory metric is still contracting - and has been for 22 months.  What's even more frightening, is that per a NY Post business section (yes, the NY Post, believe it or not, has one of the more credible business editors in medialand) featured an article two days ago in which some anonymous insiders at Walmart were fearing a much larger than expected comparable sales decline this quarter and that they were working toward reducing inventories and reducing new orders.  That article is HERE.

Finally, there is the Government's "estimate" of 4th quarter GDP, which was glorified and worshipped by the media. The stock market initially did an end zone dance, but then sold off.  Now why would that be?  I'll direct everyone's attention to an excerpt from the highly regarded King report, which explains the farce that is the Government GDP calculation:

"The Q4 GDP estimate is a total fraud. The BEA made the estimate with only two months of data. Though the usual suspects emphasized that the decline in inventory growth subtracted 3.70 percentage points from GDP, they ignored that fooling with the deflator added 1.77% percentage points and goofy trade accounting added 3.44 percentage points to GDP. 

The fraud in the GDP report is evinced by the fact that despite roaring inflation in Q4 government toadies reduced its inflation measure, the GDP Implicit Deflator, to 0.26% in Q4 from 2.03% in Q3!Even the bogus CPI shows 2.6% inflation in Q4!!! And PPI shows 4% inflation!!!! The most infuriating and disgusting scam in the GDP report is that the BEA states inflation at 0.26% to overstate GDP and then it puts import inflation at 21.8% annualized.

The toadies at the US Ministry of Truth report negligible inflation to overstate GDP and also report huge inflation in imports, which allows the deceivers to reduce imports, which increases GDP. The sharp decline in imports grossly conflicts with the biggest surge in consumption in years – unless the trade deficit has suddenly disappeared!!!!

Consumer Metrics Institute: Ironically, the flip-side of the low "deflater" being used for the entire economy is the extremely high 21.8% annualized "deflater" that was used to inflation-adjust the amounts of goods that were imported during the quarter. This huge spike in the imported goods "deflater" (up 31% from a -9.2% dis-inflationary number used in the third quarter) partially explains the dramatic drop in reported imports in the GDP equation (and that consequently boosted the overall GDP growth rate by over 4.9%). Given the recent movement in commodity prices (especially oil) it is hard to quarrel with the 21.8% number per se (even if it brings the 0.3% overall "deflater" into question), but the impact of that "deflater" has certainly added to the noise present in this GDP release, if not to the headline number itself."
 
Next time you see a bullish economic report from the Government, remember that they are usually fabricated from estimates, incomplete data and outright data manipulation.  Yes, Bernanke is either completely stoned or a calculated liar.  And, yes, the farce continues...

Even More On Housing - Sorry But It's Getting Worse...

In previous posts I have focused on supply, demand, employment levels, credit availability, and the still relatively high price of housing as the variables which would force home sales and values much lower for the foreseeable future.  Now the unlikely source of cnbc.com has brought to light yet another variable: the number of vacant homes.  Based on the latest census report on homeownership, the homeowership rate of the population dropped to 66.5% in Q4, down from the 2004 peak of 69.2%.  Even more startling was the fact that 11 percent of housing units are vacant. Here's the LINK  Think of it this way:  1 out of every 9 homes is sitting empty...

I think that the implications of that data really do not require commentary.  One more point.  I mentioned a 105% Fannie Mae refinancing program the other day.  I was mistaken about the specific details.  And the reality is that the program will make things even worse down the road than what I had originally thought. I heard the ad again yesterday.  The program allows people with "good" credit scores and who have 1st and 2nd mortgages to refinance 105% of the amount of the 1st mortgage - while leaving the 2nd mortgage in place - in order to "weather this storm and wait for the market to recover."  Quite horrifying if you ask me, as it enables a homeowner to basically take cash out of a home that is underwater, cramming down the 2nd mortgage, and add to the overall leverage on the house.  My question would be this:  if someone has good credit, why do they need "to weather the storm?"

It's getting worse by the day...

QE3 On Deck! This Confirms The "Good" Economic Reports Are Bogus

Feb 1 (Reuters) - The Federal Reserve could debate extending its bond-buying program beyond June if U.S. economic data prove weaker than policymakers expect, Kansas City Fed President Thomas Hoenig said. Another round of bond buying "may get discussed" if the numbers look "disappointing," Hoenig told Market News International in an interview published on Tuesday.  Here's the LINK

This confirms that the string of economic reports from GDP to employment, and even today's auto sales, are manipulated and misleading.  If the "good news" was bona fide, the Fed would be discussing the tightening of monetary policy - raising interest rates and unwinding QE1/2. 

But the golden truth is that the only policy keeping the banking system from collapsing and the U.S. Government funded is the Fed's printing press.

Got gold?  Just like diamonds are a girl's best friend, quantitative easing/money printing/currency debasement is a gold investor's best friend!  I'm not going to post the charts, but the daily charts for gold and silver look as bullish as I've seen in a long time.  The price correction in January has likely set up a very big move in the metals.  Pray to whatever you pray to that Eric Sprott's technical analyst is wrong about how high gold/silver may go by this spring, because that would imply that this country is on the verge of some very painful economic/social turmoil...