Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Redefining Political Economy, Globalization & Business Models Consequent on Corona Virus Pandemics - 9th Apr 20
Plus500 Rreview - 9th Apr 20
Gold Price Closely Tracks Debt-to-GDP Ratio - 9th Apr 20
Gold, Silver and Rigged Market Socialism - 9th Apr 20
Going to School in Lockdown Britain, Dobcroft Sheffield - 9th Apr 20
Amazon Face Masks to Protect Against Covid-19 Viral Particles N95, FPP2, PM2.5, for Kids and Adults - 9th Apr 20
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Jobs Report Shows America in Decline

Politics / US Politics Jul 07, 2013 - 10:55 AM GMT

By: Stephen_Lendman

Politics

Headlines cheered America's June report. Bloomberg said "US Employers Added More Workers in June Than Forecast."

"Employment roared ahead in June." America's "economy is poised for faster growth as it shakes off the impact of tax increases and budget cuts."


The Wall Street Journal headlined "Job Gains Show Staying Power," saying:

June showed "solid promise." Doing so suggests "the economy might be strong enough to grow with less help from the Federal Reserve." More on that below.

Bond investors "rush(ed) to sell." Ten-year Treasuries spiked above 2.7%. In May, yields were about 1.6%. Friday's level was the highest since August 2011.

According to ED&F Man Capital Markets fixed income analyst Tom di Galoma:

"A huge bond bubble was created, and that will take some time to resolve itself."

Thirty-year Treasury yields jumped from 3.45% in April to 4% in June. Junk bonds spiked from 5.79% in April to 7.72% in June.

Vanguard Group bond manager Gregory Nassour expects trouble. "The market is saying (it) think(s) tapering is going to happen much faster than anticipated and that cash flows are going to get very negative."

Fixed income analyst Mike Larson compared what's happening to the dot.com bust.

He calls the bond bubble bigger than late 1990s tech mania. Follow the money, he says. The more speculative investment in asset classes, the greater the risk.

Values skyrocket to irrational levels. "(W)hen everyone (piles in), you can be sure valuations will get ridiculous, and that the groundwork will be laid for a painful bust."

From 2009 through April 2013, investors poured $1.15 trillion into bonds. Doing so excludes ETF investments. They include around another $300 billion.

Last month, another $80 billion overall was added. Bond bubble mania awaits unwinding. It'll likely come incrementally. Expect many months south ahead. Forewarned is forearmed.

Irrational exuberance affects equity investors. Momentum profits don't last forever. Analyst Graham Summers understands. He knows bubbles when he sees them.

He warns about ugly times ahead. He expects worse trouble than 2008. Perhaps it already began, he suggests. No one rings a bell and says so. Markets fluctuate.

Ordinary investors stick with what works. They're mindless of huge risks. Most don't know they've been had until too late. Current problems are too important to ignore.

China faces a potential liquidity crisis. It's slowing its economy to avoid greater trouble later on. Despite unprecedented QE, Japan's economy shows weakness.

Multiple indicators flash America's economy heading south. Corporate profits are down. Europe's back in crisis mode.

Disruptive protests rage in Egypt and Turkey. Others do intermittently in Spain, Portugal, Greece, Italy, and elsewhere across Europe.

Washington's war on Syria rages. It spilled cross border to Lebanon. It threatens regional stability.

QE may slow sooner than expected. Economist David Rosenberg expects it.

It's no longer justifiable, he said. He's not alone saying so. More on that below.

Paul Craig Roberts commented on Friday's job report. "No Hope on The Jobs Front: Rising Unemployment in America," he headlined.

"For the umpteenth consecutive month and year," he said, June's report was less than meets the eye. High-paying/good benefit jobs weren't created. They haven't been for years. America's being thirdworldized.

June added 195,000 jobs. Hold the cheers. A Bureau of Labor Statistics (BLS) report explained, saying:

Leisure and hospitality: +75,000

Professional and business services: +37,000

Retail: +37,000

Healthcare (mostly ambulatory services): +20,000

Financial activities: +17,000

Federal government: -5,000 (down 65,000 year-over-year)

"Employment in most other major industries, including mining and
logging, construction, manufacturing, and transportation and
warehousing, showed little change in June."

In other words, except for modest financial services gains and some highly sought skill areas, virtually zero high-quality jobs were created.

The average workweek and overtime hours were unchanged. Year-over-year hourly earnings rose 2.2%. At around 9% based on 1980s calculations, inflation is multiple times higher than official numbers.

According to economist John Williams, full-time June employment plunged by 240,000. "Economic issues accounted for 75% of" part-time jobs. "Payroll gains were warped heavily by inconsistent seasonal factors."

Discouraged workers rose by 197,000. Involuntary part-time ones spiked by 322,000. Real unemployment's 23.4%. The headline 7.6% figure is fake.

According to Roberts:

"This deplorable report provided the cover for the market riggers to take the stock market up and the gold market down."

"Remember that economic theory about 'rational markets?' Another deception."

For weeks, Fed officials suggested slowing QE ahead. Only its timing remains uncertain. According to Graham Summers, investors hoping for continuity "are in for a rough surprise."

QE did wonders for equity investors. It didn't land on Main Street. When consumers have money, they spend it. Doing so stimulates growth. Jobs are created. Maybe better ones than now.

Central banks are losing control, said Summers. Big trouble ahead looms, he suggests.

Martin Feldstein's an establishment economist. He's National Bureau of Economic Research (NBER) president emeritus. On July 1, he headlined "The Fed Should Start to 'Taper' Now," saying:

It shouldn't wait. It "should emphasize that the pace of quantitative easing must adjust to the likely effectiveness of the program itself, and to the costs and risks of continuing to buy large quantities of bonds."

"Although the economy is weak, experience shows that further bond-buying will have little effect on economic growth and employment."

"Meanwhile, low interest rates are generating excessive risk-taking by banks and other financial investors."

Doing so "could have serious adverse effects on bank capital and the value of pension funds."

"In Fed Chairman Ben Bernanke's terms, the efficacy of quantitative easing is low and the costs and risks are substantial."

Where was Feldstein earlier? QE's been ongoing since late 2008. Mortgaged-backed securities (MBS) were bought. QE continued wrongly directed. It's done nothing for economic growth.

Bernanke suggested slowing it weeks earlier. He reiterated doing it in June. He made it conditional on labor market improvement. He said judgment depends on more than the (U-3) unemployment rate.

Year-over-year, there's been "no increase in the ratio of employment to population, no decline in the teenage unemployment rate, and virtually no increase in the real average weekly earnings of those who are employed," said Feldstein.

"The decline in the number of people in the labor force in the past 12 months (way) exceed(s) the decline in the number of unemployed (based on U-3 calculations)."

Real unemployment's the highest in decades. It reflects Depression levels. It's shows a troubled economy. It's getting worse, not better. Half of more of US households are impoverished or bordering on it.

Social safety net protections are eroding when increasing them is vital. Force-fed austerity assures harder than ever hard times. Growing millions are affected.

Creating money for speculation excludes it for economic growth. America's economy is weak, not strong. Conditions are bleak. Nothing ahead looks promising.

Manufacturing is slowing. Exports are down. So is personal income. Corporate profits are declining. Aggregate demand's weak. Rising interest rates spell trouble. Investors accepting significant risks do so at great peril.

"The danger of mispricing risk is that there is no way out without investors taking losses," said Feldstein. "And the longer the process continues, the bigger those losses could be."

"That's why the Fed should start tapering this summer before financial market distortions become even more damaging." He suggests ending it entirely by mid-2014.

Equitable QE works. Bernanke spurned it. He's Wall Street's man in Washington. He threw money at banks. He's doing it now. What can't go on forever, won't.

Wrongheaded policy continues. It's been that way far too long. Greenspan and Bernanke prioritized money printing/bond buying recklessness. Push eventually meets shove. A day of reckoning looms.

The longer money printing madness continues, the greater the eventual trouble. Feldstein's partly right. Money printing madness should be slowed en route to ending it altogether. It should be done as quickly as possible.

At the same time, he omitted explaining what matters most. Money printing works when done responsibly. David Stockman was Reagan's Office of Management and Budget Director.

In late 2010, he said:

QE "is injecting high grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient."

In early 2009, Michael Hudson said America "reached its debt limit and is entering its insolvency phase. We are not in a cycle but (at) the end of an era. The old world of debt pyramiding to a fraudulent degree cannot be restored."

Delaying the inevitable postpones a painful day of reckoning. QE helped wreck America's economy. It didn't have to be this way. Responsible officials would have prevented it. America's not run that way.

Monied interests alone are served. Popular needs go begging. Safety net protections are quaint and out-of-date. Speculative gains matter most.

Money printing madness reflects one of the greatest disconnects of all time. It robs poor Peter to benefit rich Paul. It prioritizes rising markets. It's done so at the expense of economic and human wreckage.

QE works when used constructively. Money injected responsibly into the economy creates growth. America once was sustainably prosperous. It can be again. It won't be with rogues making policy. Feldstein didn't explain.

Stephen Lendman lives in Chicago. He can be reached at lendmanstephen@sbcglobal.net.

His new book is titled "Banker Occupation: Waging Financial War on Humanity."

http://www.claritypress.com/LendmanII.html

Visit his blog site at sjlendman.blogspot.com.

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.

By Stephen Lendman
http://sjlendman.blogspot.com

His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"

 

http://www.claritypress.com/Lendman.html

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached in Chicago at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday through Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national topics. All programs are archived for easy listening. © 2012 Copyright Stephen Lendman - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules