The real job numbers

Obama gave speeches this week touting the wonderful jobs numbers but reality is quite different from propaganda. Here is a great post from Slope of Hope on what the job numbers are REALLY like (just another reason NOT to listen to anything on CNBC):

In the spirit of the words of the legendary samurai swordsman, Miyamoto Musashi (Book Of Five Rings), "Think of what is right and true. Learn to see everything accurately", let us parse the number we have been given on Friday, June 4, 2010. Hat tip to John Williams of Shadowstats for methodology.

Employment increased by 431,000 jobs was the reported number. Of that 431,000 jobs, 411,000 were temporary census jobs created by the 2010 Census. These jobs disappear in a few months. The Bureau Of Labor Statistics says that 31,000 new jobs created in May were TEMPORARY service jobs. These 31,000 jobs were also included in the May figure.

Next we come to the infamous birth/death deflater. This attempts to measure the creation of new jobs due to the formation of new small business enterprises. In an economic expansion, there maybe some merit to this. In an economic contraction, it creates pure fantasy. Included in the May report was the fantasy of an increase 215,000 jobs due to this "factor."

Let us do the math here together. 431,000 jobs less the census temporary hiring leaves us with 20,000 new jobs. Subtract out the 31,000 TEMPORARY service jobs and we have a LOSS of 11,000 jobs. From this, we need to subtract out the birth/death deflater fantasy number of 215,000 jobs and we are now at a LOSS of 226,000 jobs! Now it really starts to get "fun." Though not statistically rigorous, a case can be made that in order to keep up with population growth, 150,000 new jobs must be created per month just to stay even. IF you were to add that number in, the jobs that were NOT there would be a negative 376,000.

Month of June. A month for joyous graduations. We should all have a moment of silence and send out good thoughts to the June graduates of 2010. They are coming out of our institutions of higher learning, most laden with student loan debt and will have a very difficult time finding part-time jobs at WalMart stocking shelves at a minimum wage.

The market did not believe the numbers on Friday either. It seems that the managers of the perception manipulation machinery are running out of tricks. MOPE (Management Of Perspective Economics) is beginning to fail.

I will leave you with the wise observation of Herr Doctor Joseph Goebbels, Reich Minister for The Ministry of Public Enlightenment and Propaganda.

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

The first sentence is often quoted. Once you read the complete quote, you will understand WHY the rest is usually omitted.

http://slopeofhope.com/2010/06/a-dissection-of-the-may-employment-report-market-sniper.html

Are we there yet?

http://jessescrossroadscafe.blogspot.com/2010/05/guest-post-slouching-towards-despotism.html

Raising taxes will not raise tax revenues

Karl Denninger buried a very important stat in a post about Germany here:

http://market-ticker.org/archives/2347-I-Know!-Lets-Vilify-Germany!.html

Here is the stat:

Historically, no matter the tax rate, governments seem to be unable to collect more than about 20% of GDP in taxes.

The human nature in people seem to have a built in monitor for what is fair in paying taxes. Once that threshold is reached people will start to find ways to avoid the increase in taxes such as saving more instead of spending, using cash transactions, bartering, paying people in perks, finding other ways to hide income/assets, starting businesses so that they can write off expenses and losses, move to other cities/states/countries that have lower tax rates , selling investments at a loss, setting up trusts, donating to charity, etc. Also, increased taxes will hurt GDP on the other side of the ratio.

We are going to see countless articles about "unexpected" shortfalls in tax revenues for cities, states, and countries over the next few years. Rasing tax rates DOES NOT mean that there will be a equal increase in tax revenues. Unfortunately, politicians are ignorant of math and the human nature in regard to paying "fair" amounts of taxes. They are going to continue to increase taxes and fees on everything they can think of but will, over and over, be shocked at how the tax revenue streams just aren't increasing accordingly. The MSM will be equally shocked.

The day the market almost died

http://www.zerohedge.com/article/day-market-almost-died-courtesy-high-frequency-trading

The last dance

Now that Germany has capitulated and has decided to bail out Greece (and Italy, Spain, Portugal, and every other EU country that's lining up at the trough) the die is cast. Rome is burning. This is the last dance.

http://www.zerohedge.com/article/michael-krieger-last-dance

Europe is on fire. The EU is dead. It's over.

http://www.zerohedge.com/article/john-taylor-dead-man-walkingthe-euro-finished

Cutting back not enough for PIIGS

The paragraph below is excellent at describing the real problem with Greece and the PIIGS - it's competitiveness, not just spending and debt. The same could be said of the US today. Without a competitive engine no deficit reduction measures will bring the country back to health by itself - one can't starve themselves back to health. And the only ways to create wealth is to build something, grow something, or mine something. The only free lunch comes from the energy of the sun. If companies and consumers are willing to use slave labor, no pollution controls, poor working conditions with no recourse, etc., by outsourcing to China, India, and others, then the competitiveness of the West will continue to decline in competitiveness. Collapse is coming for the PIIGS, Europe, Japan, and the US.

If you're really good at making a pigs ear of things, why not join the EU? Of course, this is not meant as a piece of solid advice, rather it is a cry of frustration at being impotently forced to watch so many things done so badly, each in turn, and one after the other. Southern Europe's problem is essentially a competitiveness problem, and not a fiscal one, and if many states have been having growing difficulty with their negative fiscal balances, this is a symptom of the problem, and not its cause. Even in the worst of cases - countries like Greece and Portugal - the rising recourse to fiscal outlays has been a response to lack of "healthy" growth, and the root cause of this continuing difficulty in generating real growth has been the underlying lack of competitiveness, and the inability to export your way out of trouble once the burden of debt starts to rise, so simply pruning the fiscal side isn't going to cure the problem, and by now that simple point should be obvious, I would have thought.

http://globaleconomydoesmatter.blogspot.com/2010/03/why-not-unravel-imf-too-while-were-at.html

Game Over

The US has crossed the event horizon. There is only one path now - one of collapse. Spending more money is actually causing a decrease in productivity. Obama, his Administration, the Fed, and Congress have proven that they only have one tool in their toolbox and that tool is to print and spend more money. That tool no longer works - in fact it is detrimental. It is only a matter of time now, not if, for when the US and the Western Civilization as we know it collapses - and it will be fairly soon. Who knows how it all will end, but the standard of living that we have all enjoyed is about to be shaken to its core. We will be living in a different world.

http://economicedge.blogspot.com/2010/03/most-important-chart-of-century.html