What Happens When the Manipulation Ends?

What happens when our financial markets are no longer being manipulated?  We have never experienced the unwinding of an entirely manipulated financial system, so we can't predict for sure what will happen.  But at this point, a total collapse of our financial markets seems entirely plausible.  I know what many of you are saying – “Here he goes again.  The same old stuff and the market continues to go higher and higher!”  To a certain extent, you are correct in that this does not matter to anyone until it matters to everyone.  However, by then, it will be too late to take the necessary defensive measures to protect your financial assets. 

But, you ask how is it that our financial markets are being manipulated?  On October of 2011, Mr. Bernanke states that the purpose of QE1 and QE2 is to raise asset prices.  And, if I remember correctly, equities and bonds are financial assets.  Then, on March 1, 2012, Bloomberg reported that the Bank of Israel and Switzerland’s Central Bank began a pilot program to invest a portion of their foreign currency reserves in U.S. equities.  Incidentally, it is illegal for our Federal Reserve to invest in equity markets.  However, I see exactly what has been happening.  Our Fed, which cannot directly purchase equity shares, has created billions of dollar swap lines with foreign central banks.  Then, these central banks take the dollar swap lines and purchase equity shares on the New York Stock Exchange.  Therefore, our Fed has indirectly been manipulating the stock market through equity purchases of these foreign central banks.  (See my blog posting of March 3, 2012 entitled, “Manipulation of Equity Markets by Central Bankers.”)

Is This the "Mega Millions" Market?

DJIA and the S&P 500 recorded their biggest first-quarter point gains ever.  The DJIA rose 994 points, or 8.1%, and the S&P 500 rose 150.87 points, or 12%, during the first three months of 2012.  And, the NASDAQ rose 486.42, or 19%, in the first quarter, just narrowly missing its biggest point gain since 2000.  At this point in 2012, investors are thoroughly convinced that the bull market is back to stay. 

However, if you believe this rally is more like 1937 (See following chart.), you already know what followed.  So, as an investor, you can go along with the current market psychology that this is a once in a lifetime investment (Mega Millions) opportunity, or this is the worst time in generations to be exposed to equities.  In other words, the choice is yours!

Student Loans on Rise for Kindergarten

Unable to afford private school, more and more parents are turning to loans years before their children start college.  And, I thought the trillion dollars for college loans outstanding were bad enough, but these pre-college loans are insane.  Have we as a society completely lost our minds? 

According to "Smart Money," approximately 20% of families that applied for aid to pay for their children's kindergarten through 12th grade private school education had incomes of $150,000 or more.  Further, according to "Smart Money, these loans can be very expensive.  The interest rates, which can be fixed or variable, range from around 4% to roughly 20%.  (Lower rates are given to parents with higher FICA scores.)  And, the loan sizes can be large.  The average loan size given by Your Tuition Solution is $14,000.  First Marblehead (love that name, which is very appropriate for those insane parents) loans are up to $30,000 a year.  At the Lake Trust Credit Union that's headquartered in Lansing, Mich., borrowers can have up to $40,000 outstanding in so-called K-12 education loans. 

$270 Billion in Student Loans are at Least 30 Days Delinquent

This is not good, folks!  Fitch Rating Service believes several macroeconomic factors are putting pressure on student loan borrowers. The main ones are unemployment and underemployment. However, no need to worry about these student loans if they should default, because the American taxpayers have it all covered, as usual.  Aren't those taxpayers great to have?

Current Business Model of Success

 Sturm, Ruger & Company, Inc. (NYSE-RGR), announced today that for the first quarter 2012, the Company has received orders for more than one million units. Therefore, the Company has temporarily suspended the acceptance of new orders.

The Oil Conundrum Explained

 Alt-Market does a great job in explaining the current run-up in oil prices.  No, it is not lack of supply!  Of course, the proverbial bottom-line in which no one is focusing on for the root cause of the problem is the continued fiat, monetary expansion by the Federal Reserve System that depreciates the dollar.  And, why is this debasement of the dollar significant?  Answer: The world's oil market is denominated in dollars.  Therefore, it takes more dollars to purchase the crude!

Student-Loan Debt Tops $1 Trillion

Total student debt outstanding appears to have surpassed $1 trillion late last year, said officials at the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis. That would be roughly 16% higher than an estimate earlier this year by the Federal Reserve Bank of New York.

Yesterday, Bloomberg reported that almost two-thirds of U.S. student-loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process.  About 20 percent of the respondents in an online survey said the amount of their monthly payments was unexpected.  These respondents had an average of $76,000 in student debt.

Folks, this is not going to end very good.  I know the pundits say that a "college degree is an increasingly good investment because of the widening pay gap between jobs that require a degree and those that don't. Ultimately, the educational degrees and added skills are meant to help workers earn higher incomes that, in time, will more than offset the student debt."  I don't buy that argument it at all.  Sure, certain degrees will more than offset all that student debt; however, for the majority of students will be in servitude for the rest of their lives.  

Oh, that average of $76,000 in student debt, the monthly payment works out to $693.67 at 5% for 12 years.  In other words, don't go into debt to go to school.  Go to a community college where the tuition is affordable, work and go to school part-time, enter the military and let them pay for your college education, or you may want to really think outside the box and attend a college overseas where the tuition is 1/3 of what it is in the United States, and the curriculum is delivered in English.

Everything is OK! (We Just Have to Keep Telling Ourselves That.)

End of the Road Documentary Trailer from Tim Delmastro on Vimeo.

Energy Production on Federal Land Drops Under the Obama Administration

I love the way that this Administration touts that fossil fuel production is way up under the Obama Presidency.  It really is; however, not on federal land, just private land.  What really irks me is this Administration through its half-truths takes total credit for this increase in production.  Once again, the main-stream media does not call into question the President's Press Secretary or anyone else in Obama's Administration who make such a claim.   Since 2008, according to the U.S. Energy Information Administration, fossil fuel production on federal land has declined by 7%.

Gas Prices Around the World

Gasoline prices in the United States, which have recently hit record highs, are actually much lower than in many countries.  The main factor in price disparities between countries is government policy.  For example, many European nations tax gasoline heavily, with taxes making up as much as 75% of the cost of a gallon of gasoline.  In the United States, taxes are currently 20%.  The following gas prices are taken from "Fuel Prices Europe"  for March 12, 2012.  In converting the prices to gallons and U.S. dollars, I used the current rate of exchange of $1.31 to a Euro along with 3.785 liters to the gallon.

1. France $8.58/gallon
2. Germany $8.22/gallon
3. Switzerland $7.34/gallon
4. United Kingdom $8.61/gallon.

I guess through the eyes of the Obama Administration gas prices here in America are really dirt cheap!  Just last week, Secretary of Energy, Steven Chu, said that the DOE is on track to lower gasoline prices through some indirect methods, including promotion of alternatives such as biofuels and electric vehicles.  (Those indirect methods have worked really well, especially those electric cars!)  In other words, this Administration is not trying to reduce "current" gasoline prices.  If anything, it appears that this Administration wants much higher gasoline prices to not only align this country with European gasoline prices but support its agenda for developing alternative sources of energy.

Green Cars Just Can Not Catch a Break!

Soon after Consumer Reports bought the Fisker Karma to test, which had a price tag of $107,850, it stopped working. The luxury plug-in hybrid had to be towed off the track.

The "Green Light Bulb:" Government Subsidized, Of Course

The U.S. government last year announced a $10 million award, known as the L Prize, for any manufacturer that could create a “green” but affordable light bulb.  Well, the verdict is in and Phillips has won.  (Oh, as a side-bar point, that corporations is a Dutch company.  So much for keeping those so-called green manufacturing jobs totally here in the US.  But, then again, I guess that is asking too much from our government.)  Now, I do know the definition of "affordability;" however, I don't believe those in Washington do!  But, then again, those are the same folks who brought to the American taxpayer Solyndra and the Chevy Volt.  Ok, what is affordability to our government?  That light bulb can be yours for the affordable price of $50.  Yes, that is correct, and that is for "one" bulb, not a gross.

Nonfarm Payrolls (NFP) for February 2012

I will not bore you with the "spin" that is coming forth from today's "Non-Farm Payroll" numbers by BLS. I will leave that up to the government, Fed, and main stream media, such as CNBC.  However, I will give you the facts and nothing but the facts; because they don't lie.  The Bureau of Labor Statistics (BLS), or more commonly referred to as the Bureau of Lies and Scams, reported that employment rose by 227,000 on expectations of 210,000 by the so-called economic pundits.  The unemployment rate stayed the same at 8.3%.  On the surface, everything seems positive.  That is the problem, on the surface.  But what happens when one goes beneath the surface?  First, 60% of the 227,000 newly created jobs were due to an increase in part-time jobs, which are minimum wage positions, and the infamous "Birth/Death Model of the BLS."  Second, in regard to the "Birth/Death Model," it added 91,000 jobs, or those so-called statistical jobs that are really not real ones.  I like to think of those jobs in this model as being created out of thin air by the BLS.  (Something like the Fed does when it creates money in our economy.)  Therefore, when we subtract off those part-time jobs and statistical, unreal jobs, NFP only increased by 91,000, not 227,000.

Fed Chairman Ben Bernanke Has Confidence in U.S. Economy

I am going to be very direct with what I am going to say.  Some of you may consider that I have gone too far in expressing my opinion.  Then again, it is my blog, isn't it?  This man, Bernanke, must be relieved of his Chairmanship now, not later.  We can not afford his monetary policies going forward.  Period!  I thought the next President of the United States will be the most hated individual in this land; however, I now believe it will be Ben Bernanke.   Just listen to his statement before Congress.  He is encouraging retirees into extremely risky investments, which will not play out very well in a financial sense.  As a matter of fact, these retirees will probably lose everything they have invested in these risky securities!  That includes municipal bonds (Alabama, anyone?) and stocks.  In addition, he admits that his own son is on his way to racking up $400,000 in debt as he makes his way through medical school.  This whole educational thing is a bubble in itself that will burst very shortly.  I don't care if you are in medical school or getting that degree in business, education or what.  You will not be able to pay off those kinds of student loan debts.  Why? Because you will not have the financial wherewithal to make those monthly payments.  But you say, I will file bankruptcy.  Ok, go ahead.  However, those student loans will not be forgiven like all that credit card debt that you have run up.  How do you thing you received those student loans in the first place, on your good looks?  Those financial institutions knew exactly what they were doing.  The trouble is, you did not.  In other word, you will be a slave to that lender of your student loans until you die.  Bottom line, simply enjoy it while you can; because the party is ending very soon.  As a matter of fact, sooner than you think.

Chevy Volt: The Car That Keeps on Giving

I just can not get enough of this Chevy Volt thing!  It is becoming an obsession with me.  Thank you, Government Motors (GM).

Chevy Volt - Building a Better Tomorrow from Ben Howe on Vimeo.

Are Gasoline Prices Really All That High?

Basic economics teach us that a change in price of any good, service, or commodity can be the result of changes in supply and demand factors, taxes, inflation, or any possible combination of the three determinants. 

Our media outlets and government want us to believe that the greedy oil companies are responsible for the rise in gasoline prices.  Ok, let’s see how greedy these major, integrated oil and gas companies really are.  According to Yahoo Finance, the net profit margin of these greedy oil and gas companies is 7.9%.  What does that percentage mean?  Well, for each dollar of sales generated by these companies, only 7.9 cents goes to the company.  Wow!  You mean with all the risk that these companies take, they get to only keep something like eight cents on the dollar.  Yes, that is exactly what is occurring.  Let’s put this into perspective.  Federal, state, and local taxes account for approximately 20% of gasoline’s price.  Now, with this fact in mind, for every $1 of gasoline sold at the pump, governments take 20 cents.  But wait, oil companies take all the risk and get to keep only 7.9 cents but governments get 20 cents.  That is exactly correct, which is why the government does not want you to know this fact.  By the way, back in 1950, governments took only 1.5 cents on every dollar sold at the pump.

Ok, what about the inflationary impact on gasoline prices?  In 1950, a gallon of gasoline went for $.30.  Today, adjusted for inflation and government taxes, a gallon of gasoline should be $3.48, which is what I can purchase it in my area of the country.  So, when one adjusts for inflation (thank you Fed) and taxes (thank you government) but excluding supply and demand influences from China and India, the price of gasoline at the pump is definitely not out of line.  I guess the questions should be, why are gasoline prices not higher, due to demand pressures for oil coming from China and India?

So, the next time, when the media and government sources take political aim at the oil companies, remember the above exercise; and, of course, remember that the root cause of higher oil prices are indeed caused by our government increasing its take from 1.5% to 20%, monetary inflationary policies of the Federal Reserve System, and demand pressures from China and India.

The Primary Reason to Abolish the Federal Reserve System

The Federal Reserve System’s mandate is as follows: “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”  Now, according to my Webster’s New World College Dictionary, 4^th Edition, stable is defined as “not likely to change or be affected adversely.”  Now, the Federal Reserve System was founded in 1913.  Since that time the value of a dollar has declined 95.75%.  Or, put another way, that dollar in 1913 is worth approximately four cents today!  (So much for price stability.)  In my opinion, this price stability failure alone is sufficient evidence to abolish the Fed.  Then again, let’s us not forget the Coinage Act of 1792, which called for the death penalty for anyone who debases the value of the currency.  Are you listening Mr. Bernanke and the other six Board of Governors of the Federal Reserve System? 

Manipulation of Equity Markets By Central Bankers

Well, you want to know what has been driving our equity markets higher in the face of individual investors leaving it in droves?  The answer, of course, lies with all those "Central Bankers."  Bloomberg reports that he Bank of Israel will begin a pilot program to invest a portion of its foreign currency reserves in U.S. equities.  The investment will amount to 2 percent of the $77 billion reserves, or about $1.5 billion.  At a later stage, the investment is expected to increase to 10 percent of the reserves.  In addition to the Bank of Israel, a small number of central banks have started investing part of their reserves in equities.  About 9% of the foreign exchange reserves of Switzerland’s Central Bank were invested in equity shares at the end of the third quarter.

Incidentally, it is illegal for our Federal Reserve to invest in equity markets.  Now, I see exactly what has been happening.  Our Fed, which can not directly purchase equity shares, has created billions of dollar swap lines with foreign central banks.  Then, these central banks take the dollar swap lines and purchase equity shares on the New York Stock Exchange.  Therefore, our Fed has indirectly been manipulating the stock market through equity purchases of these foreign central banks.  Subterfuge, anyone?  So much for financial integrity.

GM Halts Production of Volt

Well, what do we have here?  I thought everything was going so well for the Chevy Volt.  At least, that message was conveyed in its most recent television advertisement.  In that commercial, the narrator says, "This isn’t just the car we wanted to build.  This is the car America had to build.”  The only problem is that the demand was so weak, in spite of GE buying 12,000 of them in January, that GM has decided to cease production for five weeks and 1,300 employees were given the "pink slips."  We may have seen the end of this so-called infamous green car.  This is the car that GM's CEO Daniel Akerson testified before Congress in January in which he said, "We engineered the Volt to be a technological wonder."

Impact on GDP for Every $10 Price Hike in Oil

Folks, the following graph illustrates that for every $10 increase in crude prices, cuts U.S. GDP by approximately 1%, which is worst than anyone else.  Since October of 2011, crude oil as increased by $32/barrel, or 42%.  On an annualized basis, that equates out to 100%.  To say the least, this is not good for the economy going forward into 2012, which correspondence to my bearish forecast for this year.

How Does GM Create Sales?

The following chart shows how a government led recovery looks like though its subsidiary Government Motors, which is better known as GM.  A complete and utter failure.  Why a failure?  As soon as those wonder cars are shipped to the dealers, they are recorded as "SALES" to Government Motors.  Who cares about the dealers if they can not sell them.  That is their problem, but GM has recorded sales and profits.

Note: To enlarge the graph, click anywhere within the graph.

Fair Tax Calculator: Try It, You Will Like It!

 

Don't Forget to Plug This Electric Car In!

I thought the Chevy Volt was a worthless piece of you know what, but wait, I found something even worse than the Volt.  And, what would that be?  It is the Tesla Electric Car.  It definitely is a beautifully designed vehicle.  Just take a look at the following picture, but, then again, looks can be highly deceiving!  Would you not agree?



This is the problem with the Tesla. If the battery ever becomes fully discharged, your car becomes a brick! That is, the only thing you can do is to marvel at its beauty, because it is not going anywhere.  Please read the following article for more insights into this design disaster: 

Tesla Motors’ lineup of all-electric vehicles — its existing Roadster, almost certainly its impending Model S, and possibly its future Model X — apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a “brick”: a completely immobile vehicle that cannot be started or even pushed down the street. The only known remedy is for the owner to pay Tesla approximately $40,000 to replace the entire battery. Unlike practically every other modern car problem, neither Tesla’s warranty nor typical car insurance policies provide any protection from this major financial loss.

Senator Coburn: A Breath of Fresh Air

Greece’s Lenders Have the Right to Seize National Gold Reserves

Yesterday, Greece went to the so-called "negative salary incentive" program.  Today, Reuters Global Gold Forum confirms that in the small print of the Greek “bailout” is a provision for the creditors (banks) to seize Greek national gold reserves, which is currently about 100 tonnes.  I don't think that the Greeks are going to be too happy with their government for including this provision for the bailout once they become aware of it. 

Greece Unveils the Negative Salary

Yes, beginning this month some Greeks will have to pay for the privilege of having a job.  From the Press Project, "Salary cutbacks (called "unified payroll") for contract workers at the public sector set to be finalized today. Cuts to be valid retroactively since November 2011. Expected result: Up to 64,000 people will work without salary this month, or even be asked to return money. Amongst them 21,000 teachers, 13,000 municipal employees, and 30,000 civil servants."  I wonder if this will catch on outside of Greece.  What do you think? 

GE “Forcing” Employees Into Chevy Volts

Remember those vehicles that catch on fire?  Well, GE has deemed them safe and good to go.  And in so doing, GE will purchase 12,000 of those cars for their fleet, which is about 50% of what Government Motors is projecting it will sell for 2012.  I guess GE has made the corporate decision to be patriotic for 2012, since they were not patriotic in 2010 by paying "zero" in Federal Income Taxes.  

And, the 2012 Presidential Winner is ….

President Obama!  Why?  Well, back on June 15, 2011, I posted the following message under the title, “First Presidential Forecast,”

"In making any kind of forecast is definitely a risky business, but to forecast the 2012 Presidential election is insane.  However, I feel that I maybe on to something, insane or not.  Now, if the stock market is higher in 2012, President Obama is more than likely to win.  (So far, Bennie has been Obama's best friend, and I would expect Bennie to do whatever he can to make Obama the winner.)  If the market is declining in 2012, he will lose by a significant margin. 

The strategy that I will be using is simply my S&P 500 EMA Strategy of the 15-week EMA to 40-week EMA.  If the 15-week EMA is above the 40-week EMA, Obama wins.  On the other hand, if the 15-EMA is less than the 40-week EMA, he loses.  Currently, President Obama wins, because the 15-week EMA > 40-week EMA.  However, the key is what will the EMA strategy be saying in 2012.

Further, it is interesting to note that in 2012 major stock market cycles turn decisively lower, which should be confirmed if the 15-week EMA is lower than the 40-week EMA.  What does this mean?  A powerful bear market should ensue that takes all major stock market indexes to lows below March 2009.  In other words, whoever is elected under this scenario will end up being one of the most despised Presidents ever and lose in a landslide in 2016.  Stay toned."

Since then, an interesting study that reinforces by aforementioned hypothesis, entitled “Social Mood, Stock Market Performance and U.S. Presidential Elections: A Socionomic Perspective on Voting Results” by Robert Prechter, Deepak Goel, Wayne Parker, and Matthew Lampert, contends that citizens vote in accordance with trends in social mood, and that stock market indexes appear to be the best available indicator to measure social mood.  According to the study, voters really don’t care about jobs numbers, GDP growth, European debt crisis, and the decline in home prices.  Instead, they respond to fluctuations in the stock market.  That is, the value of their stock portfolios and 401K plans.  Therefore, if the Republicans want to capture the White House in November, they better hope that the S&P 500 crashes!

The Hairdryer Sting

 "U.S. Customs and Border Protection (CBP) seized thousands of hair dryers recently that were determined to constitute a “substantial product hazard” under U.S. law, for failing to have adequate immersion protection.  CBP seized the hair dryers at the ports of Los Angeles (9,768 hair dryers) and Miami (3,614), because they lacked shock protection for consumers in the event of the hair dryers' immersion in water."  Now, let me get this straight.  CBP can stop hair dryers from entering the country but continue to let illegals come through our unprotected borders.  Something about this picture just does not same to hold water or its charge.  However, don't you feel a whole safer knowing that those hairdryers have been seized!

Another Solar Company Bites the Dust

Are there any viable solar companies left in America?  This time it is Energy Conversion Devises.  It seems like we have at least one solar company a week that files for bankruptcy protection.  Therefore, to commemorate the demise of these companies, of which the most infamous was Solyndra, the following music video is indeed very appropriate by Queen.

Gas Prices Up 83% Since 2009



When Obama entered the White House in January 2009, the city average price for one gallon of regular unleaded gasoline was $1.79, according to the Bureau of Labor Statistics. The figures are in nominal dollars: not adjusted for inflation. Five months later in June, unleaded gasoline was $2.26 per gallon, an increase of 26 percent. By December 2011, the price of regular unleaded gas per gallon was $3.28, an 83 percent increase from January 2009.  Why?  Good question.  Basic economics provides the answer in terms of a "supply and demand model."   Solution is simply to "drill, baby drill."  However, since the vast majority of Americans are economic illiterate, this simple solution does not registered with their "gray cells." 

Get Ready for $5 Gasoline at the Pumps!

 Gasoline prices are headed for $5 a gallon in many locations in the United States this year, says John Hofmeister, founder of Citizens for Affordable Energy and the former CEO of Shell Oil’s U.S. operations.  "What's really unprecedented is developing countries, particularly China and India, have this insatiable need for more oil and that has not been taken into account when we think of public policy in this country," he tells CNBC.

Now, at $5+/gallon, those Chevy Volts suddenly look a whole lot better in spite of those "extra fire extinguishers" that you need to purchase when you buy this car.

The Kiss of Death to Bulls?

When something or someone "Makes" the cover page of a nationally syndicated magazine or paper, it is usually the "kiss of death."  Are you listening bulls?  The "market top" may just be in place.

The Money Machine: Apple

Isn't investing great when you invest in "hindsight."  The following statistics on Apple are from the Slope of Hope blog:

(1) Apple's lifetime low was on July 13,1982 at $1.43 per share;
(2) It is up about 34,500% since then;
(3) More recently, it is up 7,300% since April 17, 2003, not even nine years ago;
(4) $14 million invested in AAPL in 2003 would be worth a cool Billion now, or $14,000 invested would be worth a Million.

If you missed the Apple move, maybe "Facebook" will give you another chance at the golden ring, or not!

Do You Pay for Your Cell Phone?

Did you happen to get your "cell phone bill" paid last year by the government?  Shame on you if you didn't.  Why pay for expensive cell phone bills when your government (taxpayers) will take care of those expenditures for you!  Last year, a federal program paid out $1.6 billion to cover free cell phones and the monthly bills of 12.5 million wireless accounts. The program, overseen by the FCC and intended to help low-income Americans, is popular for obvious reasons, with participation rising steeply since 2008, when the government paid $772 million for phones and monthly bills. But observers complain that the program suffers from poor oversight, in which phones go to people who don't qualify, and hundreds of thousands of those who do qualify have more than one phone."

By the way, that "Universal Service Fund Fee" that your carrier charges you every month.  Well, guess what?  That goes to fund all those free cell phone.  Simply call your carrier and ask to be included in the "Lifeline Program."  It will probably take 15 minutes of your time to answer some very basic questions, such as what model of iPhone would you like or if you want to upgrade to an iPad.

It's Thursday, so It Must be BLS Lie Day!

BLS reports that, "In the week ending February 4, 2012, the advance figure for seasonally adjusted initial claims was 358,000, a decrease of 15,000 from the previous week's revised, which of course is revised upward, figure of 373,000. The 4-week moving average was 366,250, a decrease of 11,000 from the previous week's revised, which of course is always revised upward,  average of 377,250."

The proverbial bottom-line to the report is that long-term unemployment remains a major problem.  Part-time employment and low paying jobs are not going to enlarge the coffers of the U.S. Treasury.

Your Daily Fix for Revenue and Spending Data

A Quality Assessment of Job Growth

An excellent overall assessment of the "real story" about job growth and the quality of those jobs in the U.S. maybe read over at ZeroHedge.

It’s All about Feeling Good, isn’t it?

 

Today, America is all about feelings. Are we confident?  Are we bullish? Are we optimistic about the future?  America has turned into a giant confidence game, completely ignoring the truth.  But, I want to feel good.  Then, look no further than to the governing elitists, because they spend their time spinning stories about this economic recovery and manipulating public opinion so people will feel good and spend money that they don’t have.  Facts are inconvenient.  The truth is for suckers.  Right? 

 “Half the truth is often a great lie.” – Benjamin Franklin

 

“Insanity is doing the same thing, over and over again, but expecting different results.” – Albert Einstein

Are you ready for the truth?  I definitely hope so.  Listen to what Mises said,

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as the final and total catastrophe of the currency involved.” – Ludwig von Mises

Correction to Spelling of last Post of "Dumb"

Dump should have been Dumb.  Then again, maybe "dump" was a correct use of the word for the people of Illinois.  Why?  Well, "dump" means to throw away garbage, rubbish, or better yet to "take a dump!"

Are Residents and Taxpayers of Illinois Really this Dumb (Stupid)?

From the Market-Ticker blog this morning comes the following post:

"Wondering what your taxes pay for?  If you live in Illinois, you might want to look at this, or thinking about moving there.  I'm sure you'll find that the $250k+ wages are reasonable for public school teachers, right?  Or the half-million+ wages are reasonable for university employees?  Ever wonder why college tuition is so high?  Half-million dollar+ salaries might have something to do with that, eh?  Pigs at the trough folks, and you're being extorted to pay for it.  Property taxes, income taxes, taxes taxes and more taxes.  All "for the childern", you see, even though teaching and administering a school should be a middle-class job (which means it pays a middle-class wage, and that, incidentally, is $50,000/year.)

Oh, it doesn't stop with "middle class" teachers either.  No no, we also have "middle class" cops and firefighters, who make well over $150,000 too.  Naw, there's nothing wrong with that.

When you're done throwing up at the active duty salaries, you might look at "retired".  There you will find people making more than $30,000 a month in retirement pension "benefits" -- promises your wonderful state and local governments made and now are fulfilling -- and guess who's getting the bill?  You are.

Then there are the State Worker's Compensation Claims.  Some are probably legitimate.  But I gotta admit, getting $300,000 worth of taxpayer funds due to "overexertion by lifting objects" sounds pretty good to me.  Where do I sign up to soak the taxpayer with this one?

If we, the people, ever want to do something about the cost of government, we had better start right here, especially when it comes to these salaries and retirement "benefits."  I don't care what people were promised -- it was and is being extorted from the people at gunpoint, and nobody has the right to do that.

These pensions need to be clawed back and stopped on a forward basis, and those working in "public service" need their salaries capped at no more than 125% of the median family income immediately and forevermore into the future.

You go into public service because you want to service the public, not to get rich.  To those who claim that we need "the best and brightest" in such jobs, I counter with the fact that volunteer fire departments worked just fine forever until unions forced them to be replaced by public tit-suckers, and that being a cop was historically always a middle-class job -- until we militarized the police forces.

This platinum-plated crap cannot continue, must not continue, and it is time for the people to rise and demand that it stop right here and now."

As I have stated on this blog previously, if you are dump enough to live in Illinois or put up with its crap, you deserve everything that is going to come to you.

Only Employed Individuals Pay Taxes

The title of this post not only "cuts-to-the chase" but is extremely profound in an era of complexity and governmental spin on monthly employment numbers.  Ok, let's "cut-to-the-chase."  I simply want to calculate and know what the monthly employment participation rate is, because this rate determines who pays taxes.  Therefore, in analyzing employment numbers for fiscal sustainability (government revenues), I only look at the "Employment to Population Ratio (Household Data Table A-1--Not Seasonally Adjusted Figures)," which is reported monthly by the Bureau of Labor Statistics (BLS).  (Why use the "not-seasonally adjusted" data?  The reason is that I want the true numbers, not those seasonally adjusted numbers that have to be adjusted and revised every month.)

From its latest release, dated February 3, 2012, total civilian population and total employed for January 2012 was 242.269 million and 139.944 million, respectively, or a ratio of 57.8% (139.944 million/242.269 million).  Keep-in-mind that these are the individuals that pay taxes!  Let's see where we were one year ago.  For January 2011, total civilian population and total employed were 238.704 million and 137.599 million, respectively, or a ratio of 57.6%.  In other words, the participation ratio is about the same year over year; and there has been no significant improvement in this ratio since it bottomed in 2009.  But, we do know that government spending and deficits continue unabated; however, those actually paying taxes have not for all practically increased.  That is definitely not good for sustainability on the fiscal side.

Mark Your Calendars

February 29, 2012 is "Shut Down Corporations Day" by the various Occupy Movement Camps.  The objective put forth by one of the key organizers is to make corporate America go bankrupt.  My advice to those naive individuals is to be very careful what you ask and wish for.  To all my "Bear" friends, this may just be the catalyst for the start of the "Great Super-cycle Bear," which is suppose to start within the first quarter of this year.

Are You Tired of the BS From the BLS?

Are you sick of the BLS propaganda?  Then, do the following calculations, which are provide by ZeroHedge: the US civilian non-institutional population was 242,269 in January 2012, which is an increase of 1.7 million month over month.  Now, apply the long-term average labor force participation rate of 65.8% to this number and you get 159.4 million.  That is what the real labor force should be.  The BLS reported it as 154.4 million: a tiny 5 million difference.  Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers.  What does this mean?  That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%.  Compare that with the BLS reported decline from 8.5% to 8.3%.  And that is how with a calculator and just one minute of math, one strips away countless hours of BLS propaganda.

Unemployment Falls to 8.3%! How Did That Happen?

 

How did we really get to an 8.3% unemployment rate for January 2012?  Very simple math, which, of course, the Bureau of Labor Statistics (BLS) will not tell you nor the media.  For January 2012, the NFP (Non-Farm Payroll) increased by 253,000, but 1,200,000 individuals dropped out of the labor force because of, you guessed it, no work.  There you have it.  If you drop out of the labor force, you are no longer an individual nor a statistic according to our government.  And, to make matters worse, the "Labor Force Participation" as a percentage of the total available "Labor Pool" is at a 30-year low of 63.7%. 

A Primer to American Debt Made Easy

Bulls 1 Bears 0

As we start 2012, the Exponential Moving Average (EMA) has generated a "bullish signal" (15-week EMA > 40-week EMA).  It generated a "bearish signal" back on August 29, 2011.  Therefore, if you are so inclined, you may want to consider the long-side of the market by purchasing SPY, which is the ETF for the S&P 500.  If you have been long SH, which is the inverse ETF of the S&P 500, you may want to consider moving into a cash position, or, as indicated purchasing the SPY.  The choice is up to you.  Another strategy, if you are long the inverse SH, would be to liquidate 50% of the position this week and see what the close of the market is this Friday, January 20.

In looking at the above chart, the price is still below the long-term bullish support line, which was penetrated in August 2011.  This bullish support line was drawn from the low back in March 2009.  Also, the price is still below the bearish resistance line from the top of August 2011.  Given those two factors, I am inclined to believe that last week's EMA signal could be a false bearish signal.  I will, of course, update this chart on Friday.

Bears Must Act Now!

Unemployment Falls to 8.5%; 200,000 New Jobs Created

The “Nonfarm Payroll (NFP)” number of jobs being created came in at 200,000 on expectations of 155,000. The unemployment rate now stands at 8.5%, which is the lowest since February 2009.  Great news, isn’t it?  Well, not exactly unless you are entering the labor force as a temporary worker with virtually no benefits or job security, very low skill sets, and of course willing to work for the minimum wage.  See, I look at the number of manufacturing jobs being created as the basis for sustainable income growth.  For this month, manufacturing payrolls, which are those high paying jobs where you do need skill sets, rose only 23,000 on an expectation of 155,000.  That number is not good!

Here's the problem, the non-institutional working-age population went from 240.441 million to 240.584, a gain of 143,000 people of working age.  But the number of employed people went down from 141.070 million to 140.681, which is a loss of 389,000.  Adding the two, which is the correct way to measure the employment situation, the economy on a population-adjusted basis lost 532,000 jobs.  And, why is this an important measurement for overall economic health?  Well, it controls the taxing capacity of the government.  That is, more jobs simply means more tax revenues. 

Moral of the story, as usual, is to always look behind the scenes to discover the real truth, which is something the majority of the electorates don’t take the time to do!

Bulltarts: Welcome to 2012

Central bankers of the world have become gods to the Bulltarts; ever-increasing equity prices have become the Manna provided by these gods.    Rising financial asset prices simply demonstrate to those bulltarts that these gods have found favor with the way they are handling the world economies.  They take great pride in believing that their gods have fostered unlimited blessings on them because of their unwavering faith in the powers of the central bankers.  However, the Bulltarts, of course, are blinded to the real truth, which will finally be revealed this year.  They fail to realize that their gods (central bankers) are really anti-Messiahs, who are nothing more than wolfs in sheep clothing.   2012 will finally be the year that reveals this truth.  However, for the Bulltarts, it will be too late once this truth is revealed.  Their false gods that they placed such great and undying faith in will simply devour their financial portfolios. 

2011 Market Performance

 

 

S&P 500 closed the year down 0.04 point at 1257.60, basically unchanged for the year.  The DJIA closed the year up 5.5% at 12217.56.  The NASDAQ closed the year down 1.8%.

For Treasury bonds, the 30-year Treasury bond registered a 35% return, while the benchmark 10-year note gained 17%.

The euro ended 2011 3.3% lower on the year.

The most actively traded gold contract rose 10% on the year, while silver futures ended with a loss of 9.8%.