How to Fix Unemployment

By Dale Netherton – Re-Blogged From http://www.iPatriot.com

Unemployment is at 4.9% if you believe government figures.  Some have placed it as high as 17%.  Like the fudged figures of global warming and inflation they are probably not only inaccurate but distorted.

When the first jobs came into being they were the result of a businessperson seeking labor to increase his production rate to meet the demand of his customers.  These laborers were hired and paid from the profits the businessperson was able to make.  Anything before this phenomena took place was the result of plunder and confiscation.  The method of confiscation is the way of government and criminals.  Government takes and redistributes but it neither creates wealth or trades for its revenues.  The government could trade if it were confident it could raise revenues voluntarily but it prefers to use the method of the criminal by way of taxation.

In the scheme of things government is a limited agency that is created to protect the individual rights of the citizens.  It cannot be created for anything else without introducing a method of confiscation.  When that occurs its reason for being is negated by the injustice it promotes and enforces.  Eventually all government that ignores this fundamental ingredient of its reason for being evolves from a free society to a slave pen where the government rules by regulation and taxation, eventual deficit spending and hyperinflation which destroys the currency and demolishes the fiscal integrity of the nation which leads to chaos, rioting, revolution and unless a limited government is created, the scenario repeats itself.

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Near-Record 94.6 Million Americans Aren’t in Workforce

Re-Blogged From http://www.newsmax.com

Behind the cheerful spin the Labor Department and government talking heads put on the official monthly jobs data is a sobering reality: a more-realistic unemployment rate is probably closer to 10 percent and a wide swatch of the American public remains out of work.

Friday’s report sketched a picture of a resilient job market that likely keeps the Federal Reserve on track to raise interest rates when it meets next month.

Yet the economy remains pocketed by weaknesses that have left many feeling left behind on the eve of Election Day. Job gains have been steady, but pay raises have only recently become widespread. And millions of Americans are working part time but would prefer full-time work.

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Financial Repression And A Chronic Unemployment Problem

By Gordon T Long – Re-Blogged From http://www.silver-phoenix500.com

What is little appreciated today is that the Humphrey Hawkins Full Employment Act in 1978 assisted in “birthing” Financial Repression and placing us firmly on the Monetary policy path the Federal Reserve is presently imprisoned by.

Deep State planners fully understood then that employment would become an increasingly larger problem in America and within the developed nations as leveraged buyouts with immediate “downsizing”, “rightsizing” and “outsourcing” were beginning to dominate the financial engineering game of the day.

Driven by the political concerns in the late 1970s about rising unemployment, the Humphrey-Hawkins legislation in 1978 fundamentally compelled the U.S. central bank to drive interest rates progressively lower (see chart below).

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Hillary Says Corporations and Businesses Don’t Create Jobs

By Gary DeMar – Re-Blogged From Constitution.com

If you want a growing economy that does not depend on the State, do not vote for Hillary Clinton. She doesn’t know anything about creating jobs. She said the following in 2014:

“Don’t let anybody tell you it’s corporations and businesses create jobs. You know that old theory, ‘trickle-down economics.’ That has been tried; that has failed. It has failed rather spectacularly.”

Hillary believes that by taxing corporations at ever higher rates, more jobs will be created. She believes that when the government takes money from corporations in the form of taxes and redistributes that stolen money to people who did not earn it, jobs are created. Does this mean if I steal money from some of my neighbors and redistribute a percentage of that money to some of my other neighbors I would be creating jobs?

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Proof The Economic Recovery Has Ended

By Michael Pento – Re-Blogged From http://www.pentoport.com

The primary data point that the perennial bulls on Wall Street claim as evidence for an improving economy is the monthly jobs number. The Non-farm Payroll Report claimed that 255,000 jobs were added in July on a seasonally adjusted bases. This number was well above the 12-month average of 190,000. And according to the Bureau of Labor Statistics (BLS), at total of 1.66 million additional people have been employed thus far in fiscal 2016, making this the one bright spot in the economy.

And with 1.66 million additional paychecks flooding the economy, one would assume the U.S. Treasury was flush with new tax receipts, which would assist in reducing the budget deficit. However, according to the Treasury Department, the deficit came in at $112.8 billion in July, the highest since February’s $192.6 billion. For the first ten months of the fiscal year, which ends Oct. 1, the budget deficit was $513.7 billion, up from $465.5 billion a year earlier.

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Statistical Shenanigans at BLS

cropped-bob-shapiro.jpg   By Bob Shapiro

Non-farm private payrolls for July came in with a surprise 43,000 larger increase than expected. Including new government jobs, the number reported was 75,000 larger than expected.

But, can we really believe the numbers?

This is a Presidential election year, and it turns out that the numbers influence the election results. Good numbers – and a rising stock market – presage a continuation of the party in power, while bad numbers – and a falling market – seem to forecast a turnover to the opposite party.

There seems to be enough motive to fudge the numbers. But, how do you fudge the non-farm payrolls number? People either are working or they’re not working.

One way is through the so-called Birth-Death Model. As the bean counters collect their data, they don’t actually count every single person and business in the country. Instead, they survey a sample – in statistics, a survey of a thousand can come surprisingly close to the results you would get if you counted the whole population.

From the results they get using just the sample, they project what the whole economy is. But the US Economy changes constantly. People leave jobs, and others get jobs. Businesses go out of business, while others start up.

To account for the changing landscape of US businesses, the Bureau of Labor Statistics (BLS) uses its Birth Death Model – they pick a number out of thin air, hoping the number is close – or at least believable. Here are the numbers for the last year or so:

Birth Death 080816

Since April 2015, only three times has the BLS said the Birth-Death Model called for a reduction of the official number, for a total of 280,000 jobs. Against that, there were 13 months of upward adjustments (guesses) for a total of 1,839,000 extra jobs, over and above what their actual survey results said there should be.

If we remove the Birth-Death adjustment for July, instead of beating the estimate by 75,000, it would have fallen short by 37,000. In my book, the numbers are bogus – politically motivated.

After all the hard work of collecting the actual data that the rank and file BLS (and other agency) employees do, their bosses make them look like criminals because of all the phonying up that the bosses do.

It likely will not happen ever, but I can dream that someday a new President will have the good sense to investigate and prosecute the perpetrators of fraud at the BLS.

Bank Of England Restarts The Clock On The Fed’s Inevitable QE Relaunch

By Andrew Hoffman – Re-Bllogged From http://www.Gold-Eagle.com

There’s much to discuss, starting with the “powers that be” utter desperation – particularly, the gold Cartel – to stave off “Economic Mother Nature” and the “unstoppable tsunami of reality” as the end game plays out right of its eyes.  For example, just two days after the Monte Paschi “bailout” – that in actuality, won’t occur until year-end, if it can raise €5 billion of equity, and sell €9 billion of bad loans – European stocks are dramatically lower; including Unicredit, Italy’s largest bank, which has plunged nearly 20%; and Deutsche Bank, the “world’s most systematically dangerous institution” – which touched its all-time low stock price yesterday morning, before the PPT pushed it oh so slightly higher (and as I write, it’s plunging towards said “death level” of $12.50/share anew).  In my view, we are at most a few weeks before the real panic sets in.

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Unemployment & Civil Unrest

cropped-bob-shapiro.jpg   By Bob Shapiro

In Summer 1965, the US suffered through much turmoil, including the Watts riots.

Today in the US, we again are having civil unrest, but with a major difference. Today’s unrest appears to be more organized, with police and other authorities as specific targets.

Even the “lone wolf” attacks seem to have a common thread tying them together – Islam. Now, I’m not saying that most American born muslims are set on destroying our country, but before you dismiss me as a racist, you might want to reread the current events of the last couple of years.

Most of the press stories seem to be placing the blame squarely on the Republicans – currently in office and hopefuls on the campaign trail. While many Republicans in Congress are complicit with the policies that are hurting all Americans – including poor blacks – for the most part, they aren’t the ones coming up with these stupid policies.

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Overthrow the Establishment to Fix the Economy

By Larry Kudlow – Re-Blogged From http://www.NewsMax.com

Famed investor Wilbur Ross recently told CNBC that “Trump represents a more radical new approach to government that the nation’s economy desperately needs.” He’s right.

Trump seeks an overthrow of the establishment. He’s a disrupter. Just what we need to fix the economy.

The situation is that desperate.

The last 15 years of economic policy, especially the last eight years, represent a relapse that harks back to the 1970s. Now like then, we have a high-tax, high-spend, high-regulation, Fed-pump-priming, standard-less dollar-manipulation policy mix. In general, it’s a government-planning approach in the U.S. and around the world.

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The Keynesians Stole The Jobs

By Ron Paul – Re-Blogged From http://ronpaulinstitute.org

Late last week the markets were shocked by a surprisingly bad May jobs report – the worst monthly report in nearly six years. The experts expected the US economy to add 160,000 jobs in May, but it turns out only 38,000 jobs were added. And to make matters worse, 13,000 of those 38,000 were government jobs! Adding more government employees is a drain on the economy, not a measure of economic growth. Incredibly, there are more than 102 million people who are either unemployed or are no longer looking for work.

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Primary Trend Indicator Generates A Long-Term Stock Market Sell Signal

By Robert McHugh – Re-Blogged From http://www.Gold-Eagle.com

For the first time in six years, our Primary Trend Indicator, a long-term trend stock market forecaster, generated a new signal, a Sell Signal on May 31st, 2016. The last signal change was a Buy in May 2010. These long-term Buy and Sell signals are rare, but have been very accurate at identifying the start of new long-term trends. This is a warning that stocks are about to enter a long-term Bear market, one that will likely be lengthy and deep based upon the market’s behavior after previous Buy and Sell signals from this indicator.

The most recent previous signal came on May 31st, 2010 when the PTI generated a Buy signal, and it remained on a Buy signal until May 31st, 2016. After that Buy signal six  years ago, the Industrials rose 8,152 points (an 80% gain).

The last time it generated a new long-term trend “Sell” signal was almost eight years ago, on September 30th, 2008, just as the autumn stock market crash started, when the DJIA closed at 10850. We saw a 4,400 point drop (i.e. 41 percent decline) after this sell signal was triggered.

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So What If The G-7 Fools Are Uncomfortable?

By David Stockman – Re-Blogged From Stockman’s Contra Corner

President Obama says that the feckless world leaders who squandered their taxpayers’ money on last week’s G-7 junket to Japan are “rattled” by Donald Trump.

Bully for the Donald!

These clowns need to be rattled—-right to their very bones. And we might as well start with our own snake oil salesman-in-chief.

It seems that Obama can’t stop taking bows for the awesome recovery he claims to have presided over and the 14 million new jobs he claims to have created. Yet that’s as big a whopper as anything that Trump has ever let fly.

In fact, at the February 2008 peak prior to the crisis, the BLS reported 138.5 million nonfarm payroll jobs compared to 143.9 million in April 2016. The net gain is thus only 5.6 million, and it means nearly 9 million or 61% of the 14 million new jobs our President has been crowing about are not “new” at all.

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Why Trillion Dollar Deficits Are Coming Back Soon

By David Stockman – Re-Blogged From Stockman’s Contra Corner

Yesterday I noted that the frogs of Wall Street linger in the boiling pot because they are under the delusion that stocks are cheap based on the sell-side hockey sticks that always show $135 per share of S&P earnings and a 15X multiple in the next year ahead. Besides that, should anything go awry with the economy, Washington purportedly stands ready to bail-out the stock market with a new round of fiscal stimulus after the election.

The latter delusion brings to mind what might be called the “CBO hockey stick”, which is a fiscal fantasy so unhinged from reality as to make the Wall Street stock analysts look like models of sobriety by comparison. To wit, CBO’s latest 10-year budget projection assumes that the US economy will hit full employment next year, and remain there with nary a bump or recession in sight through September 2026, at least.

Well, now. Don’t bother to say Rosy Scenario move over because the arithmetic of CBO’s fantasy speaks for itself. That is, it is advising Washington to relax——we are heading for 207 straight months without a recession. And not in the next world, but this.

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Dow Could Be Above 25,000 Without Government Regulation

By Michael Carr – Re-Blogged From http://www.newsmax.com

A recent study concluded that the growth of regulation between 1977 and 2012 reduced economic growth by about 0.8 percent a year. Without all of those new regulations, GDP would be about $4 trillion higher.

This may seem like an abstraction but individuals suffer when economic growth fails to meet its potential. With $4 trillion in economic growth, there would be more jobs and jobs would pay better. As study by the Mercatus Center at George Mason University found, regulations could be shaving as much as $13,000 from each worker, on average.

Skeptics need to realize many manufacturers wouldn’t relocate if regulations didn’t increase the cost of doing business. There would be more jobs and better paying jobs without onerous regulation.

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Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing

By Michael Snyder – Re-Blogged From Economic Collapse

We continue to get more evidence that the U.S. economy has entered a major downturn.  Just last week, I wrote about how U.S. GDP growth numbers have been declining for three quarters in a row, and previously I wrote about how corporate defaults have surged to their highest level since the last financial crisis.  Well, now we are getting some very depressing numbers from the rail industry.  As you will see below, U.S. rail traffic was down more than 11 percent from a year ago in April.  That is an absolutely catastrophic number, and the U.S. rail industry is feeling an enormous amount of pain right now.  This also tells us that “the real economy” is really slowing down, because less stuff is being shipped by rail all over the nation.

One of the economic commentators that I have really come to respect is Wolf Richter of WolfStreet.com.  He has a really sharp eye for what is really going on in the economy and in the financial world, and I find myself quoting him more and more as time goes by.  If you have not checked out his site yet, I very much encourage you to do so.

On Wednesday, he posted a very alarming article about what is happening to our rail industry.  The kinds of numbers that we have been seeing recently are the kinds of numbers that we would expect if an economic depression was starting.  The following is an excerpt from that article

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Next Employment Crisis Is Here

By Michael Snyder – Re-Blogged From Economic Collapse

Should we be alarmed that the number of job cuts announced by large U.S. companies was 35 percent higher in April than it was in March?  This is definitely a case where the trend is not our friend.  According to Challenger, Gray & Christmas, U.S. firms announced 65,141 job cuts during April, which represented a massive 35 percent increase over the previous month.  And so far this year overall, job cut announcements are running 24 percent higher than for the exact same period in 2015.  Meanwhile, on Thursday we learned that initial claims for unemployment benefits shot up dramatically last week.  In fact, the jump of 17,000 was the largest increase that we have seen in over a year.  Of course the U.S. economy has been slowing down for quite a while now, and many have been wondering when we would begin to see that slowdown reflected in the employment numbers.  Well, that day has now arrived.

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Former McDonald’s CEO Drops Hard Truths on What $15 Minimum Wage Does to People Who Need Work

By Katie Lapotin – Re-Blogged From Independent Journal

It’s no secret that Democrats (and labor unions) are clamoring for a raise the minimum wage in the United States to $15 per hour.

That vision is already a reality for workers in some cities nationwide — and soon will be for all workers across the state of state of California.

Cities in the United States with a higher-than-average minimum wage:

Image Credit: Screenshot/The New York Times

Image Credit: Screenshot/The New York Times

But not everyone’s in favor of the steep wage increase, given the hardships that higher wages place on businesses already struggling to stay afloat and the fact that jobs are often lost whenever minimum wages are raised.

Among those opposing the wage hike is Ed Rensi, the former president and CEO of McDonalds. He wrote about the effect that a $15 minimum wage would have on his old company in Forbes on Monday, suggesting that:

…a $15 minimum wage won’t spell the end of the brand. However it will mean wiping out thousands of entry-level opportunities for people without many other options.

He explained why:

The $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business such as McDonald’s”

In truth, nearly 90% of McDonald’s locations are independently-owned by franchisees who aren’t making “millions” in profit. Rather, they keep roughly six cents of each sales dollar after paying for food, staff costs, rent and other expenses.

Then he does the math, which will leave entry level workers in a bad spot:

“A typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three-quarters of their profitability. (In reality, the costs will be much higher, as the company will have to fund raises further up the pay scale.) For some locations, a $15 minimum wage wipes out their entire profit.”

Rensi isn’t the only current or former fast food executive speaking out about the push.

Last month, the CEO of Hardee’s and Carl’s Jr. told Business Insider that he is strongly considering moving toward opening automated restaurants because the cost of hiring manual labor has become too expensive.

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Why The Bulls Will Get Slaughtered

By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com

Well, they got that right. Detecting that “parts of the U.S. jobs report for January seem fishy”, MarketWatch offered this pictorial summary:

Needless to say, none of that stink was detected by Steve Liesman and his band of Jobs Friday half-wits who bloviate on bubblevision after each release. This time the BLS report actually showed the US economy lost 2.989 million jobs between December and January. Yet Moody’s Keynesian pitchman, Mark Zandi described it as “perfect”

Yes, the BLS always uses a big seasonal adjustment (SA) in January——so that’s how they got the positive headline number. But the point is that the seasonal adjustment factor for the month is so huge that the resulting month-over-month delta is inherently just plain noise.

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Bad Numbers And Dark Prophesies: Almost Everybody’s Cutting Something

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

The drumbeat of bad (and sometimes just plain weird) news has risen lately — but today’s batch stands out. Here’s a small sampling:

US jobless claims were higher than expected, and continue the rising trend of the past few weeks.

US layoffs surged to a six month high, while asset write-downs are up worldwide. Among today’s related announcements: 6,000 layoffs from ConocoPhillips and 10,000 from Shell Oil, and a $5.75 billion write-down from Credit Suisse.

These aren’t surprising given the bloodbath in oil and banks’ exposure to that industry. Many, many more shocks from these two sectors are coming.

Q4 US worker productivity fell at a 3% annual rate. According to the linked article: “Economists blame softer productivity on a lack of investment, which they say has led to an unprecedented decline in capital intensity.” In other words, while corporations were borrowing trillions to buy back their shares they weren’t bothering to build new factories or upgrade old ones.

US December factory orders posted their biggest drop in a year. Fewer people are working and those who are are either underpaid or insecure, so they’re apparently buying less stuff. And, again, companies are using all their free cash to buy back shares rather than build capacity.

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Newsflash From The December ‘Jobs’ Report—–The US Economy Is Dead In The Water

By David Stockman – Re-Blogged From David Stockman’s Contra Corner

Here’s a newsflash that CNBC didn’t mention. According to the BLS, the US economy generated a miniscule 11,000 jobs in the month of December.

Yet notwithstanding the fact that almost nobody works outdoors any more, the BLS fiction writers added 281,000 to their headline number to cover the “seasonal adjustment.” This is done on the apparent truism that December is generally colder than November and that workers get holiday vacations.

Of course, this December was much warmer, not colder, than average.  And that’s not the only deviation from normal seasonal trends.

The Christmas selling season this year, for example, was absolutely not comparable to the ghosts of Christmas past. Bricks and mortar retail is in turmoil and in secular decline due to Amazon and its e-commerce ilk, and this trend is accelerating by the year.

So too, energy and export based sectors have been thrown for a loop in the last few months by a surging dollar and collapsing commodity prices. Likewise, construction activity has been so weak in this cycle—-and for the good reason that both commercial and residential stock is vastly overbuilt owing to two decades of cheap credit—–that its not remotely comparable to historic patterns.

Never mind. The BLS always adds the same big dollop of jobs to the December establishment survey come hell or high water. In fact, the seasonal adjustment has averaged 320,000 for the last 12 years!

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Happy New Employment

cropped-bob-shapiro.jpg   By Bob Shapiro

As we are about to ring in the new year, we can give thanks for the “Full Employment” Economy. That big Thank You needs to go to the manipulators of the official statistics over at the Bureau of Labor Statistics (BLS) and elsewhere in our government.

It should be remembered that the Participation Rate among working age Americans is at a multi-generation record low. 10 Million Americans or more burned through over a year’s worth of unemployment benefits, and still could not find a job which payed more than Welfare and Food Stamps.

These people, who have given up hope, were re-defined out of the ranks of the officially unemployed. Too bad for them, but they no longer count – or rather no longer are being counted.

However, some people were able to find full time jobs, even if the skill level – and pay level – was far below what the had become accustomed to. Too bad for them, but having to accept half of what they used to be paid, doesn’t mean they are unemployed. Under-employed people don’t count – or don’t get counted by the BLS.

Some formerly unemployed Americans have accepted part-time jobs. Checking the official numbers, part-time positions have skyrocketed while full-time openings have plunged. (The surge in part-time vs full-time jobs must be one of the hidden “Benefits!” of ObamaCare.) But again, a job is a job, so no use complaining about it. And, no use expecting to be counted as unemployed.

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These Ain’t Your Grandfather’s “Jobs”

By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com

This “Jobs Friday” ritual is getting truly absurd. So it can’t be repeated often enough: These artifacts of the BLS’ seasonally maladjusted, trend-cycle modeled, heavily imputed, endlessly crafted and five times revised “jobs” numbers have precious little to do with the real health of the main street economy.

Indeed, the six-year run of job gains since early 2010 primarily represents “born-again jobs” and part-time gigs. In economic terms, they do not remotely resemble your grandfather’s industrial era economy when a “job” lasted 40 to 50 hours per week all year round; and most of what the BLS survey counted as “jobs” paid a living wage.

Not now. Not even close.

The Wall Street fools who bought the dip still another time on Friday do not have the slightest clue that the US jobs market is actually quite dead.

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Recent Page 2 Items

By Mark J Perry – Re-Blogged From American Enterprise Institute

traffic

1. Chart of the Day (above). Based on the most recent “Traffic Volume Trends” report from the Federal Highway Administration, Americans drove more in September of this year (about 264 billion miles) than in any previous September in US history. The number of total vehicle miles driven over the most recent 12-month period from September 2014 to September 2015 of about 3.12 trillion miles set a new record for that measure of US traffic volume. And the 3.4% increase in September’s 12-month total traffic volume over last year was the largest annual increase in that measure since 1997. Falling gas prices, along with a gradually improving US economy are the likely reasons for the record-setting traffic volume this year.

2. Interesting Facts of the Day: Mobile broadband subscriptions (47.2% of households worldwide) have now overtaken households with Internet access (46.4% of households worldwide), and there are now 7.1 billion mobile subscriptions globally. Source: TechCrunch

3. One of the Best-Ever Letters to the Editor (in the Star Tribune 11/13/2015):Letter

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Are We Becoming a Nation of George Costanzas?

By Barry Brownstein – Re-Blogged From The Foundation for Economic Education

George Costanza, a fictional character in Seinfeld, might be the most miserable, complaining “victim” in television history.

George is a pro at shirking responsibility, making excuses, and blaming other people. He is an amateur at adding value in the workplace. 

It has been almost 25 years since NBC first broadcast an episode of Seinfeld titled “The Revenge.” George rashly tells off his boss and quits his job. Later that day, he sits in Jerry’s apartment lamenting over his future job prospects. Jerry gently probes George about his interests. “I like sports,” George replies, and muses of being a general manager or an announcer. When Jerry points out that he has no qualifications for those jobs, George retorts, “Well, that’s really not fair.”

A Distorted View of Fairness

Starting at the top of any profession isn’t an option, but George doesn’t understand that. He schemes how to get ahead and lacks all initiative to do actual work.

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Payrolls +271,000; Is the Game Changing?

[Recent “Non-Farm” Payrolls were up nicely last month. However, much more than half the rise came from the Business Birth/Death Model, which guesses an adjustment based on a guess of how many new businesses were started as opposed to how many shut their doors. These out-sized make-believe adjustments are one reason that government provided statistics must be taken with a grain (or more) of salt.  -Bob]

By Gary Tanashian – Re-Blogged From http://www.Silver-Phoenix500.com

Given the October Payrolls data, its effect on interest rates and the US dollar we seem to be back to a point similar to where we were 1 year ago when we used a strong USD (and corresponding weak Yen and Euro) to plot bullish trade possibilities in Japan and Europe, and a bearish environment for US exporters.

But first, with the help of the highly recommended Floatingpath.com let’s continue to break down the particulars of the Payrolls report (we reviewed monthly ‘jobs’ growth by industry in a post at nftrh.com): Inside Jobs.

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Who Exactly Is Government Helping?

By Doug Bandow – ReBlogged From FEE: The Foundation for Economic Education

Almost everyone believes that government is an essential institution, necessary to protect us from those threats we cannot counter on our own. But even if we accept that justification, it rarely describes what American government actually does, whether at the local, state, or federal level.

What exactly is the government protecting — and from whom?

Local Protection from Food Trucks

Late last year, Rachel Kennedy wanted to bring a Cuban food truck to North Kansas City, Missouri, a town of four square miles and 4,500 people. That shouldn’t have been controversial. The city agreed to allow the trucks to operate during lunchtime, and several other operators came, too. There was no reason to restrict the trucks to lunchtime, but never mind. At least for one meal a day, consumers enjoyed more choices at less cost. What could possibly go wrong?

The restaurant owners might lobby to expel the food trucks, that’s what. Choice and competition are good, except when you are an incumbent provider. Monte Martello, a local Dairy Queen operator, complained, “They bring the truck in, they compete against us for four hours, and then they drive away.” Outrageous!

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Failure to Launch

By Peter Schiff – Re-Blogged From Euro Pacific Capital

The popular belief that the U.S. economy has been steadily recovering has endured months of disappointing data without losing much of its appeal. A deep bench of excuses, ranging from the weather to the Chinese economy, has been called on to justify why the economy hasn’t built up any noticeable steam, and why the Fed has failed to move rates off zero, where they have been for seven years. But the downright dismal September jobs report that was released last Friday may prove to be the flashing red beacon that even the most skilled apologists can’t explain away. The report should make it abundantly clear that we are far closer to recession than recovery. But old notions die hard and, shockingly, most economists still believe that we have hit a temporary speed bump not a brick wall. But at some point healthy hope turns into dangerous delusion. We may have just turned that corner.
The report was horrific any way you slice it. The consensus of economists had expected to see 203,000 new jobs in September, not a particularly impressive number, but at least it would have been an improvement from the 173,000 new jobs that were added in August. Not only did September miss substantially, at just 142,000 jobs, but August was revised down to 136,000 (Bureau of Labor Statistics) (there were economists who had even expected August to be revised up to as high 247,000). This means that the last three months have averaged just 167,000 jobs, a level that is not even close to where we should have been in a real recovery. But it gets worse from there.

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Numbers Lousy – FED Scared Witless

cropped-bob-shapiro.jpg   By Bob Shapiro

Several statistics were reported this week, and in large measure, they disappointed analysts. Personal Income was up, but Personal Spending was up even more. This means that Americans were adding even more debt to their balance sheets. Since Saving is where the Capital comes from to help grow our Capitalist system, this means negative growth down the road.

PCE Prices were up only 0.1% in August (same as July), but these numbers generally are in the fairy tale category. Looking instead at the CPI, the way it used to be calculated in 1980 (via http://www.ShadowStats.com), inflation is running at around 7½%.

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New Record In Waiters And Bartenders Masks First Manufacturing Drop In Over 2 Years

By Tyler Durden – Re-Blogged From ZeroHedge.com

In August, the reality of the oil crunch finally caught up with the BLS, when not only did the number of Mining and Logging employees decline again by 10,000 workers to 823K, the lowest since October 2011, an 8-month stretch of consecutive declines last seen during the previous recession driven by the ongoing weakness in the oil patch and the US shale drilling sector…

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More Troubling Signs of Minimum Wage Damage on the West Coast, Part II

By – Re-Blogged From http://www.AEI.org

Preliminary results indicate that the increases in the minimum wage this year on the West Coast have had negative employment effects in Los Angeles (for hotel workers, see this CD post) and Seattle (for restaurant workers, see this CD post). There is now additional evidence that the minimum wage increase in San Francisco this year to $12.25 an hour (on the way to $15 on July 1, 2018) is having an adverse effect on the city’s restaurant employment, as Stephen Bronars reports today in Forbes (“Higher Minimum Wages in San Francisco and Seattle Mean Fewer Restaurant Jobs“).

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$15 Minimum Wage in New York

By  – Re-Blogged From http://www.Mises.org

The state of New York has voted to raise the hourly minimum wage from $8.75 to $15 following fast food workers’ protests. Governor Andrew Cuomo and New York City mayor Bill de Blasio and their families will pitch in the additional $6.25 per hour to help support low-wage workers in the fast food industry. “This is just the beginning. We will not stop until we reach true economic justice,” Cuomo said. “As much as fast food workers need and deserve a raise – and we know they do – we must ensure that every worker gets a living wage,” de Blasio filled in.

Well, not really. The state will raise the minimum wage, but Cuomo and de Blasio do not expect to foot the bill. Instead, they’re happy to sign the dotted line because they are on the receiving end. The “raise” effectively buys them a lot of votes using other people’s (and corporations’) money. For this reason, it is no surprise that Cuomo considers the vote “one of the really great days of my administration.”

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The Persisting Slump In Factory Orders——‘Escape Velocity’ It Ain’t

While the payroll report commands almost all attention, the view from factory orders is simply much more significant. Even if we accept that payroll growth is steady at something greater than 200k per month, that is still at least two steps removed from actual economic activity as is intended from that same orthodox framework. Jobs are supposed to lead to income which is supposed to drive further spending, so the jobs figures themselves aren’t even the true gain. It is always just assumed that spending goes with jobs without ever dissecting the processes that lay in between.

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Barack Obama Tells Another Whopper—He Did Not Create 12.8 Million Jobs

By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com

America is better off when President Obama is out on the stump bloviating and boasting rather than in Washington actively doing harm. But the whoppers he just told the students at the University of Wisconsin are beyond the pale. Said our spinmeister-in-chief:

 And the unemployment rate is now down to 5.3 percent. (Applause.) Keep in mind, when I came into office it was hovering around 10 percent. All told, we’ve now seen 64 straight months of private sector job growth, which is a new record — (applause) — new record — 12.8 million new jobs all told.

That’s a pack of context-free factoids. There is still such a thing as the business cycle, and only economically illiterate hacks—-like those who work on the White House speech writing staff—-would measure anything from the deep V-shaped but momentary bottom that happened to occur during Obama’s second year in office. What counts is not that we’ve had a bounce after a terrible bust, but where we are now on a trend basis.

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The bad and the bad of US corporate income taxes

There are many good reasons to undertake corporate tax reform this year. Politicians from both sides of the aisle have declared support for cutting the headline corporate tax rate and recouping the lost revenue through a broadening of the tax base. President Obama’s budget for fiscal year 2016 calls for a cut in the corporate tax rate from 35 to 28 percent (with a special rate of 25 percent for manufacturing). Former Ways and Means Chairman David Camp’s tax reform proposal from last year called for a cut in the rate to 25 percent. The recent Rubio-Lee proposal would similarly cut the rate to 25 percent. There is even speculation that Paul Ryan and President Obama may be working on a deal to cut headline rates this year. Here’s why we need to get this done.

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Research: The Minimum Wage and the Great Recession

(Note: The researchers look at the Minimum Wage hike in 2007 and its effects on unskilled labor employment. What they found was that the M.W. increase caused a 4% fall in employment of 25-54 year olds and an 8% fall of 15 to 24 year olds. – Bob)

By Jeffrey Clemens and Michael Wither – Re-Blogged From http://www.Cato.org

Between July 23, 2007, and July 24, 2009, the federal minimum wage rose from $5.15 to $7.25 per hour. Over a similar time period, the employment-to-population ratio declined by 4 percentage points among adults aged 25 to 54 and by 8 percentage points among those aged 15 to 24. Both ratios recovered slowly following the recession’s conclusion, and young-adult employment remains well below its pre-recession peak…. In our research, we analyze the minimum wage’s effects on the employment and income trajectories of low-skilled workers during the Great Recession and subsequent recovery.

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The Fed’s Bizarro World Economics: Rising Home Prices, Soaring Stocks, Fallen Real Wages

By Anthony B. Sanders – Re-Blogged From http://www.davidstockmanscontracorner.com

I have often wondered when the media would catch on to the REAL story about why the housing market is so slow to comeback, in terms of borrows applying for a mortgage. Particularly since The Federal Reserve has help the holders of capital with it’s monetary expansion.

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US Economic Headwind

cropped-bob-shapiro.jpg   By Bob Shapiro

Economic numbers released today show the US Economy contracting. But some of these numbers understate the damage.

One of the most important statistic is Unemployment. Government figures show that Initial Claims for Unemployment, and Continuing Claims, both were up – to 320,000 and 2,421,000 respectively. While single week changes certainly can’t demonstrate a trend, there has been a significant increase from just a couple of months ago.

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Perverse Incentives

  

By ROBERT P. MURPHY – Re-Blogged From http://www.FEE.org

Just about everyone agrees that incentives affect behavior, but economists really mean it. That’s because economists take the logic of incentives further than most other people are willing to. Such analysis often reveals that government policies have unintended consequences that seem shocking to the average person. The list includes welfare programs that lead to higher rates of birth out of wedlock, seatbelt laws that lead to more pedestrian deaths, and even the possibility of changes in estate taxation that lead to people strategically timing their deaths.

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Is Washington Fabricating the Economic Data?

Bureaucrats in the U.S.S.R. kept issuing glowing economic reports right up until the Soviet state collapsed. Of course, many snickered at those reports for years. Widespread poverty and unemployment were obvious and no amount of government bluster obscured that reality. People generally understood that economic reports were little more than another propaganda tool.

Here in the U.S., official data is considered more reliable. Americans have been told the economy is getting better since bottoming in 2009. There is some evidence to support this. In particular, real estate prices have made a big recovery due to cheap credit, and the stock markets are back to making new highs. So when officials tell us things are getting better, we have reason to believe them.

But, investors should be careful before suspending all disbelief. The well-paid bureaucrats in Washington have the same powerful incentives to support their government’s narrative as their peers did in Moscow. Continue reading

The FED vs the Economy

cropped-bob-shapiro.jpg   By Bob Shapiro

We have been hearing for several years now that Inflation is too low. The implied problem is that, if we want to stimulate our Economy to produce more jobs, Inflation is the way to do it.

And, God forbid, we should slow Inflation down so much that… Gasp!… prices actually fall. Deflation would be too much for the US Economy to recover from.

Nonsense! Rising prices DO NOT stimulate the Economy. Quite the opposite – tinkering

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$15 Minimum Wage – Now?

cropped-bob-shapiro.jpg   By Bob Shapiro

The current US economic environment of continuing Great Recession makes me wonder what those pushing the $15 Minimum Wage are thinking. Here are a few of the numbers I see:

The BLS reported 321,000 new jobs in November. That sounds like good news, but since 317,000 old jobs were lost, there were only 4,000 more Americans working than in October. (Private firm ADP shows

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An amazing chart of an amazing job-creating state; we owe a debt of gratitude to ‘Saudi Texas’ and the shale boom

Since the Great Recession started in 2008, employment has fallen along with the Labor Participation rate. It is only in the last 2 months that employment has gotten back to pre-recession levels for the US as a whole.

But, contrast two oil rich states: “Saudi” Texas and the anti-energy California. California still has 7.3% unemployment, and people & businesses are fleeing the socialist level over-regulation. In Texas, employment never fell below pre-recessionary levels, and in the last year, provided fully 1/6 of all new US employment – over 420,000 new jobs in the last year!

Please read on for the story of the Texas Miracle. (Bob Shapiro)

Mark Perry AEI   By Mark J. Perry

(Reblogged from the American Enterprise Institute)

US vs Texas Employment

The chart above shows a most amazing economic phenomenon: Since

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