Thursday, September 8, 2011

Jobless Claims: Stinks Again (414k)

Gee, where are the jobs? We know where they're not - in the US.

In the week ending September 3, the advance figure for seasonally adjusted initial claims was 414,000, an increase of 2,000 from the previous week's revised figure of 412,000. The 4-week moving average was 414,750, an increase of 3,750 from the previous week's revised average of 411,000.

That's nice. You don't need the DOL report to know there are no jobs, you only need to get outside of the damned Washington DC beltway to discover this.

The futures, after tanking some on the Euro rate decision, dropped another half-percent on this release.

The simple fact of the matter is that this is not about tax cuts (for the rich or otherwise) or any such thing.

The problem is that zero interest rates have destroyed capital formation, destroyed reasonable returns for prudent people who have actually saved their entire life and thus collapsed their income, and as a consequence spending from surplus output and new business formation has collapsed, transferring the only remaining factor for consumer spending to Ponzi-style government deficit spending and credit used for consumption and speculation, none of which is capable of producing prosperity.

Those of you who don't get this damned well need to wake the f^#c up. A prudent middle-income individual who saved $500,000 over their 45 year working life (about $10k/year) and had it in CDs @ 5% had a nice $25,000 a year safe income.

Now that same CD earns 1% or less, under the rate of inflation, and as a consequence that prudent person has less than $5,000 a year in income to spend and a deteriorating cash position in purchasing-power adjusted terms. In addition those who are not in retirement but have amassed similar amounts of money no longer have any meaningful risk:reward incentive to use those funds to form capital and start new businesses as their wealth is being serially and intentionally destroyed. This leaves them with only one path available that makes sense - speculation or "going Galt" and telling the business world and government to go screw a pig.

Bernanke's claim that this outcome is "good" because it made the stock market go up has been exposed as a bald Ponzi lie. Yeah, it went up (from last fall to this summer) for a while, just as did Charles Ponzi's returns.

How's that working out for you now, suckers? ALL pyramid schemes eventually collapse as you always run out of suckers. It is just a matter of figuring out when.

You won't hear that from Obama tonight, just as you didn't hear it last night from any of the Republican candidates. Yet the truth of this is evident in the actual data, if you bother to look at it - which nobody wants to do with a dispassionate glance, say much less study.

All we have left is speculative capital flows from one nation to another looking for the next "safe" place to try to steal a few percent of return - for now.

There is no "safe place" including metals. This is a fools game that will ultimately destroy your wealth and leave you destitute. The only means of success is to demand that the politicians cut this crap out and enforce that demand, removing the artificial constraints holding down interest rates and allow the general market principle to re-assert itself that borrowing money must always have a cost in real terms, not just nominal ones and the more-dangerous your intended use for the funds (such as consumption or speculation) the more it will cost! Yes, this means that those who got over-levered will be wiped out - bankrupted - by their folly. That's good, not bad, as removing excess systemic debt is necessary to restore balance to the economy.

Until this happens there will be no meaningful job growth and nobody - other than myself and a few other intrepid bloggers - are willing to discuss these facts on the national stage.

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