Employment went down but so did the unemployment rate, amazing!

The civilian non-institutionalized population increased from 240,584,000 to to 242,269,000, a increase of 1,685,000, and more importantly the actual civilian employment dropped from 140,681,000 in December 2011, to 139,944,000 in January 2012.

Using the BLS data the employment was 139,994,000 and the civilian labor force was 153,485,000 for a unemployment rate of 8.8%. So there is a statistical correction with their numbers of 0.5%?

If you use the late 90s as a base line the unemployment rate is 139,994,000/164,112,000 = 14.7%. The 164,112,000 is based on a growth rate of 16.68% in the civilian non-institutional population increase since June 1999.

If you use more recent participation rate the unemployment rate INCREASED to 11.5%.

Either way you calculate it the federal government has decided they do not want Mitt Romney cutting their budgets and the propaganda war is on. Look for this bogus data to continue through election day.

M2 money supply

Translated there is a whole lot of money in the system sitting idle, doing nothing. Obama is the all time king of killing a nations appetite for spending. The ultimate buzz kill in the history of mankind.

The problem will be if Obamacare is repealed, and Mitt Romney is the likely next president, will all the idle cash stuffed away at the Federal Reserve, T-Bills, create a stock market boom, inflation, and final fiat monetary bust…

Or does the Federal Reserve keep pumping trillions of counterfeit dollars into this zombie economy hoping for a Keynesian miracle…

Inquiring minds certainly are paying attention to the historic financial times we live in.

Money Zero Maturity sitting idle waiting for the financial train wreck known as Obama and Ben Bernanke to exit stage left

‘Money Zero Maturity – MZM’

A measure of the liquid money supply within an economy. MZM represents all money in M2 less the time deposits, plus all money market funds.

MZM has become one of the preferred measures of money supply because it better represents money readily available within the economy for spending and consumption.

This measurement derives its name from its mixture of all the liquid and zero maturity money found within the three “M’s.”

Obama Campaign Ad Claims 22 months of job growth and 3.1 million jobs added

And the political ads…

Yes we expect lies in political ads as well. But the one about 22 months of job growth caught my eye. It claims 22 months of private sector job growth, which is correct, 106,772,000 to 109,928,000, but there is quite a bit of information missing that would put our job picture into proper context. The private sector growth was an anemic 1.5% annual rate. The population grew at a 1.5% rate in that time, so what have we gained?

What the ad does not show is that the total private industries employment is down from 115,610, or 4.9%, from January 2008. We are still in a jobs recession. We are still negative jobs from 2008.

We spent trillions on “shovel ready” stimulus and did not even break even on past economic performance?

I guess not. More like misallocation of resources.

Where is the multiplier?

This is not the genuine jobs picture. This is just one tiny slice of the jobs picture. The total employment level since Obama has entered office has increased from 140,436,000 to 140,681,000, or a total of 245,000 jobs, or a 0.17% increase, or an annual rate increase of 0.05%, well below the population growth rate.

This is what the campaign ad is based on. Not so optimistic when the overall picture is looked at.

A much better barometer to reflect the depression we are suffering would be the civilian labor force participation rate. This indicator peaked out at an annual rate of 67.1 in the late 90s when the federal government consumed 18.2% of the Gross Domestic Product (GDP). Today it is at its lowest level since 1983 at 64.1%, reflecting the federal government increased consumption of the GDP, up to 25.3%.

Bigger government, less jobs. Someday this lesson will be driven home to Americans.

What should be equally disturbing for voters is the real personal disposable income per capita numbers. Per capita disposable income is down from $34,609 to $32,326, 6.6% since May 2008, and down 1.4% since Obama took office.

Total employment level is at best, inconsistent since Obama took office.

The GDP has increased from $12.6632 Trillion (chained 2005 dollars) to $13.4224 trillion, a 6% increase, or 2.2% annual rate, so why is real disposable income down 1.4%? Certainly we are not in a recession, right?

We are in a recession, the good part of the recession, the part where the crazy uncle runs out to Wal-Mart and buys a bunch of crap from China to sooth the pain of dad losing his job.

The Civilian Labor Force Participation Rate is the Lowest Since 1983 due to bad economic policies

What has been happening is with the money creation, and inflation, capital users, contractors, manufacturers, retailers, have been given false signals that income is growing, and have been spending accordingly. They are tricked into spending resources into the economy that are not needed.

The inflation is hiding the real decline in the economy, and capital producers will realize this overexpansion sooner, or later, and the contraction will occur. Some say this correction in “profits” and “expansion” is already happening. When the capital users realize they have over expanded more layoffs will occur. There will be no other alternative without genuine economic growth.

This is where we are, January, 2012.

An inflationary economy is transferring wealth from the middle-class to the elites and government. Most Americans lack proper economic education to understand why this is happening and the prospects of dictatorship have increased dramatically.

We have an economy not producing real job growth with the very real possibility of more job losses in the near future.

There is more debt, more government, and in my opinion three months overdue for a massive deleveraging and correction.

After Running a Deficit of 10.9% of GDP The GDP Growth Rate is Projected to be 1.7%.

Real Per Capita Disposable Income is projected to drop 0.85% for 2011. What this means is that there is more activity in the capital users economic numbers, distorted by Federal Reserve policies of inflating the money supply, than on Main Street where paychecks declined.

Inflation creates false signals of artificial demand and causes capital users to increase demand for inputs when there is no real inflation adjusted demand there. This means they will take on more risk than they would otherwise assume, increasing the probability of a bust in the near future.

Below is a summary from Zero Hedge of the GDP Numbers;

“When commenting earlier on the GDP number we noted that the sellside brigade is about to start coming out with Q1 GDP “warnings” now that inventories will likely subtract between 0.5% and 1% from growth in the current quarter. Sure enough here is Goldman with the first warning saying that “The composition of growth was slightly negative for the Q1 outlook, in our view.” That’s not surprising. What is is that also according to Goldman, the auto sector contributed 0.3% to the overall GDP number. Which means that ex inventories and autos (sold courtesy of NINJA loans provided by Uncle Sam as discussed extensively every month with the release of the Fed’s Consumer Credit number), the US economy grew a meaningless 0.5%! And this in the quarter when the US economy was supposed to be on a tear. We are now fairly concerned that there is an outright chance of economic contraction in Q1.

Real Per Capita Disposable Income, Main Street lost in 2011

BOTTOM LINE: Q4 GDP growth slightly worse than expected. Compared to our forecasts, details showed more inventory growth, less consumer spending and less business investment.

MAIN POINTS:
1. Real GDP increased by 2.8% (annualized) in Q4, a bit weaker than the consensus had expected. The composition of growth was slightly negative for the Q1 outlook, in our view. Growth in domestic final sales–GDP less inventories and net trade–was just +0.9%, in contrast to our expectations for +2.0%. The weakness reflected: (1) slightly weaker than expected consumer spending of +2.0%; (2) weaker than expected business fixed investment, reflecting a 7.2% decline in structures investment; and (3) a 12.5% contraction in federal government spending on national defense. National defense spending tends to be volatile, and we would therefore discount this component as a signal about the near-term growth outlook. The misses on consumer spending and business investment are arguably more meaningful.

2. Among the other details, inventories increased by $56bn during the quarter, adding 1.9 percentage points (pp) to GDP growth–much more than we had expected. In contrast, net exports actually subtracted 0.1pp from growth. We had forecast a positive contribution from net trade of +0.5pp. GDP excluding motor vehicles increased by 2.5%, implying that the rebound in the auto sector added 0.3pp to growth.

3. The GDP price index increased by just 0.4% (annualized) in Q4, far below consensus expectations for a 1.9% increase. Nominal GDP growth was therefore quite soft at just +3.2%. The core PCE price index rose by 1.1%, slightly above consensus forecasts.”

New Home Sales at Historic Lows

Loans Secured by Real Estate

As if further evidence of the declining economy was needed commercial real estate loans are down 4.1% from July 2010 to July 2011, the last month of available data.

The sad part of it our politicians in Washington know this is happening, and that it will get worse. There are still 4 million homes that need to be sold and 2 million waiting to be foreclosed on. And nobody in Washington or the Federal Reserve will take responsibility. All that happens is another round of increasing the money supply to satisfy the elites on Wall Street, and another round of borrowing to satisfy the elites in the federal government.

Tonight President Obama will give a class warfare speech about fairness, while his crony capitalism ways continue unabated. All this talk is nothing but deception for the economically illiterate voters, and those just too stupid, being of low IQ, to understand. The real issues of economic stagnation, and soon collapse, will be avoided. To say Obama is the world’s number one hypocrite does injustice to hypocrites everywhere.

While Obama bloviates about economic injustice the real creator of economic justice, the Federal Reserve, lack of an immigration policy, and government transfer payments of 15.3% of a poor persons paycheck, will never be mentioned.

Politicians do not care about economic injustice, they only like to talk about it and blame the straw man, “the rich,” and baffle the, too stupid to understand the con game, (mostly) Democratic voters. Meanwhile the super rich, like Buffett, get richer.

The following appeared in Zero Hedge on 1-24-2012.

Warren Bufett and his employee Obama

As it turns out, it is not just natural resources and aquifer purity that Obama had in mind when sealing the fate of the Keystone XL pipeline. No – it appears there were far more relevant numerial metrics that determined Obama’s decisions. Such as the bottom line number of Buffett’s Burlington Northern, which according to Bloomberg, is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp.’s Keystone XL oil pipeline permit.

‘“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”

And quite delighted to reap the windfalls of unfounded populist fears she forgot to add. Because while the whole “carbon-credit” multi-trillion top line expansion scheme for Goldman under the pretense of actually caring for the environment may have collapsed, it is not preventing others from trying and succeeding where even Goldman has failed.”

The most corrupt president of all time?

“Rail car production is already at a three-year high as manufacturers such as Greenbrier Cos Inc. (GBX) and American Railcar Industries Inc. (ARII) expand to meet demand for sand used in oil and gas exploration, according to Steve Barger, an analyst at Keybanc Capital Markets Inc. in Cleveland, citing Railway Supply Institute statistics.

Rail-car suppliers can add capacity, Hatch said.

“Railroads are not just a stopgap while we wait for a pipeline,” Hatch said in an interview. “They are potentially part of the long-term solution.”

Railroads are being used in North Dakota (STOND1), where oil producers have spurred a fivefold increase in output by using intensive drilling practices in the Bakken, a geologic formation that stretches from southern Alberta to the northern U.S. Great Plains. During 2011, rail capacity in the region tripled to almost 300,000 barrels a day as higher production exceeded what pipelines handle, according to the State Department report on Keystone XL.

Burlington Northern carries about 25 percent of the oil from the Bakken, said Krista York-Wooley, the railroad spokeswoman. The company can carry higher volumes from North Dakota or Alberta, she said.

If you have the money Obama is your friend

“With an extensive rail network and proven expertise in moving energy, CP offers a flexible option for transporting crude oil and other energy-related products to and from key locations in North America,” Vice President Tracy Robinson said in an e-mail. “Rail is scalable, allowing CP to effectively keep pace with the shipping needs of producers.””

To quote Zero Hedge;

“So those wondering how it is that AAR railroad statistics continue to be so very strong, it is not because the economy actually justifies it: it is because crony interests such as those of the Octogenarian of Omaha demand it as “payment” for their crony collegiality with the biggest dunce president since Carter.

In other news, it is truly amazing how with every new development, America is now becoming like one giant conspiracy theory, only this time it is actually not a theory as with every passing day we see it enacted in practice.”

Briefly the economic problems are;

1. Too much debt, deleveraging must occur before we can grow the economy.

2. Too much government consumption, spending, of the economic resources. Government, federal, state, and local, creates waste and misallocation of resources and consumption should not exceed 25% of the GDP, total. Currently federal, state, and local consume over 45% of the GDP creating huge deficits and crowding out of sustainable productive private enterprise job creation.

3. Regulations. Regulators do not add to the GDP, never did and never will. Regulators will never protect the American public from financial disaster; they completely missed the housing bubble and are completely missing the money bubble. They are useless and the sooner we the people realize it the better. The best regulation is strong private property rights and the ability to utilize the lawyer services of law firms to enforce those private property rights. Call it the Morgan and Morgan regulators.

4. No border fence or enforcement of immigration law. When President Warren Harding entered office in 1921 in the middle of a sever recession with 20% unemployment he understood that is was not beneath his dignity to enforce immigration laws. Why have we created this nation if we cannot enforce the borders?

None of this will be discussed tonight.

Banksters love Mitt romney

The bankers lined the pockets of Obama in 2008 with millions in contributions, Goldman Sachs, $1,013,091, JP Morgan, $808,799, Citigroup Inc., $736,771, and others totaling $745 million.

Obama’s special interest groups have been paid back in full, and them some for unions, universities, green companies, favored Democratic districts, with one notable exception, banks.

The banks got demonized by the Occupy Wall Street protest and were the recipient of one of the most corrupt and restricting pieces of legislation ever to be passed, Dodd-Frank. Probably the most corrupt senator, Dodd, and the biggest defender of Fannie Mae and Freddie Mac, Barney Frank. Probably the worst combination in the history of mankind to write any regulation, and it is killing the banking industry.

Many of these banks will soon be bankrupt again, between the chaos in Europe, poor economic performance in America, while still holding millions in unsold foreclosed homes.

Another bail out is needed. Another reappointment of Ben Bernanke is needed. The last thing these zombie banks need is a hard money Federal Reserve Chairman. There will be a huge need to print lots of cash, soon. Ben Bernanke, or someone even more aggressive in bailing out banks, needs to be appointed by the next president.

The financial contribution list speaks for itself.

Goldman Sachs$367,200
Credit Suisse Group$203,750
Morgan Stanley$199,800
HIG Capital$186,500
Barclays$157,750
Kirkland & Ellis$132,100
Bank of America$126,500
PriceWaterhouseCoopers$118,250
EMC Corp$117,300
JPMorgan Chase & Co$112,250
The Villages$97,500
Vivint Inc$80,750
Marriott International$79,837
Sullivan & Cromwell$79,250
Bain Capital$74,500
UBS AG$73,750
Wells Fargo$61,500
Blackstone Group$59,800
Citigroup Inc$57,050
Bain & Co$52,500

Why the financial economy will collapse, sooner or later. Notice I said financial, its not the worse thing that can happen. War is the worst thing. If we have leadership that understands economic fundamentals of sound money, gold, silver, we can recover relatively quickly.

Greece, which is a time bomb set to ignite the nuclear system itself, but seems to have been “forgotten about” where market participants are concerned. Their short term debt is trading at interest rates between 300-400%. They are flat assed broke and the market has already deemed them so.

The problem is twofold, first the market IS paying attention to because it is Euro negative (betting against the European Union) which temporarily points the finger away from the U.S.

The fact that there is a crisis in Europe has postponed our troubles temporary, take advantage of this time, it will not last long.

If Greece really does “technically” default, the Eurozone is toast which it is anyway with Portugal, Italy, Ireland, Greece, and Spain, (PIIGS) they will all default. The Euro was clearly not well thought out politically or financially.

The first problem is one of moral hazard. Moral hazard happens when an individual or institution does not take the full consequences and responsibilities of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party (in this case the more fiscally responsible members of the European Union) to hold some responsibility for the consequences of those actions. Some countries politicians recognized that because the EU agreement backing up the debt of individual countries they could borrow much more money than previously. The PIIGS countries took full advantage, running up huge debt in the hopes that the European Central Bank (ECB) would be forced to print money and bail them out. Printing money by the ECB would essential spread the bail out over every single member of the EU in the form of inflation. Essentially everyone would be punished for the behavior of irresponsible politicians.

In the original inception countries were suppose to keep debt under 60% of GDP and no more than 3% per year. Greece-160%, Italy-121%, Germany-85%. The PIIGS simply could not control themselves and loaded up on debt. People need to understand that politicians are just as greedy as capitalist. When you put a pile of money in front of them they will consume the money to buy votes and pay off constituents.

Secondly and most importantly, which of course is not getting much press are all the Credit Default Swaps (CDS) insurance that has been sold. Greece CANNOT be allowed to technically default and trigger the “insurance” payouts. If this was happen, there could be 5, 10, 20 defaults by “insurers” just like AIG who could not pay.

If the CDS are not triggered …it should have already triggered at least 10 months ago during the first bailout… then the owners of CDS, many who have “hedged” their portfolios with this bogus insurance will not be paid. Many institutions will become insolvent …as if they are not already… by the simple fact that they own Greek debt that has dropped already 80+% in value with no compensation on the other side where they expected their CDS “insurance” to pay.

CDS CANNOT pay.

For that matter, how funny is it that the U.S. which is the reserve currency, has CDS in the $Trillions written against debt.

Greece alone will blow the system. Look at the U.S. … exponential overkill. The “writers” of Greek CDS do not have the capital to pay on a default and the suckers who relied on the CDS payments need them to be made whole. Without these payments they are bankrupt.

What this means is that everyone in this game has closed their eyes, taken a good long look into the abyss, and realize that in a few short weeks it will all be over for them. Bankruptcy, unemployment, ruin.

This is just one more black and white example as to why “mathematically” it is over and has been since late 2008 when central banks and treasuries decided to borrow, print and “save the world” for the time being.

How long is “the time being”?

All the central banks did was make the crash we will soon experience that much worse.

Why is it going to be worse?

Because our federal government have accumulated massive debt in that time. Our politicians have misallocated resources on unproductive government work scams like 19th century rail roads we do not need, corruption, bail out of bankrupt states, bail out of insolvent zombie banks that will go bankrupt again, artificially supported housing prices, not liquidating remaining housing stocks, fighting wars, and making the suffering much worse in the long run.

American corporations have approximately 20% market share exposure to the EU. It is not a small problem “over there.”

The only correct move for those playing the game today is not to play the game.

Iranian President Mahmoud Ahmajinedad

“An EA source reports that a relative in Tehran ordered a washing machine for 400,000 Toman (about $240) this week. When he went to the shop the next day, he was told that — amidst the currency crisis and rising import costs — the price was now 800,000 Toman (about $480).

Another EA source says that the price of an item of software for a laptop computer has tripled from 50,000 Toman to 150,000 Toman within days.”

What gets lost is why Iran is suffering hyperinflation, government. Simply put according to the CIA the Iranian government collects 31.2% of the GDP (the USA is currently spends 25.3% and collects 14.4%) in taxes and spends that amount stifling private enterprise. To quote the CIA;

“Iran’s economy is marked by an inefficient state sector, reliance on the oil sector, which provides the majority of government revenues, and statist policies, which create major distortions throughout the system. Private sector activity is typically limited to small-scale workshops, farming, and services. Price controls, subsidies, and other rigidities weigh down the economy, undermining the potential for private-sector-led growth. Significant informal market activity flourishes. The legislature in late 2009 passed President Mahmud AHMADI-NEJAD’s bill to reduce subsidies, particularly on food and energy. The bill would phase out subsidies – which benefit Iran’s upper and middle classes the most – over three to five years and replace them with cash payments to Iran’s lower classes. However, the start of the program was delayed repeatedly throughout 2010 over fears of public reaction to higher prices. This is the most extensive economic reform since the government implemented gasoline rationing in 2007. The recovery of world oil prices in the last year increased Iran’s oil export revenue by at least $10 billion over 2009, easing some of the financial impact of the newest round of international sanctions. Although inflation has fallen substantially since the mid-2000s, Iran continues to suffer from double-digit unemployment and underemployment. Underemployment among Iran’s educated youth has convinced many to seek jobs overseas, resulting in a significant “brain drain.”"

Now all the saber rattling in the Persian Gulf makes sense. The Iranian government has over committed itself with expenditures and is printing money to fill the deficit, which it cannot finance like the USA at 0.008% interest rates, and must try to create tension to drive up the price of its main export, oil.

But what will happen when the USA cannot finance its debt at 0.008%?

This graph of the M-2 money velocity sums up the economy since Bush II and Obama

As boring as it is for the average person it is important to understand some basics about monetary policy, or money. It is important because politicians rely on the average American citizens’ ignorance of monetary policy to steal from them. Removing this ignorance exposes common thieves in Washington D. C., Wall Street, and the Federal Reserve.

Briefly the Federal Reserve prints fresh money and distributes it to Wall Street banks through the Federal Open Market Committee (FOMC). The FOMC buys billions of financial instruments (certificates of deposit, bad mortgages, etc.) from these banks. The banks use the money to give out loans, this is justified as increasing “liquidity” in the markets.

The selected banks can do with the money whatever they want, speculate on Wall Street stocks, and put the money back into short term US Treasury Department T-Bills, even back into the Federal Reserve.

The federal government is also a beneficiary of the Federal Reserve printing money. Third party brokers buy federal government T-Bills, notes, and bonds, then sell them after a short period of time, back to the Federal Reserve. This buying of federal government notes allows politicians to finance vote buying schemes and pay off political special interest without raising taxes, the cost is paid by future taxpayers or current ones through inflation. Either way the politician get to hide the theft from the America people because of the Federal Reserve.

The Federal Reserve currently owns $1.66 trillion of the $15 trillion US Federal debt.

Good old fashion printing of cash up 18.5% in 2011

The newly created money allows Wall Street and Washington politicians to purchase assets at “old” price levels before the new money has worked its way to Main Street in the form of inflation.

Similar to a classroom full of 30 students and the teacher gives only two of her favorite students $50 each and tells the students to share the $50 with the other students. We all know what will happen; the two favored students will keep $25 for themselves and pass the remaining $25 to the next favored students, all the way down to the least favored students. This is how the Federal Reserve System works.

If you are a Wall Street banker or Washington DC politician you get special treatment not available to average Americans.

For 2011 the Federal Reserve increased the M-1 money supply 18.5% from $1.8288 trillion to $2.1678 trillion.

In 2011 the M-2 supply increased 9.8% from $8.8037 trillion to $9.6648 trillion.

The Money Zero Maturity (MZM) increased 8.9% from $9.8562 trillion to $10.7373 trillion.

The monetary base, the money the Federal Reserve prints, increased 33% from $1.987 trillion to $2.643 trillion in 2011.

Did anyone on Main Street get a 9%, 10%, or 33% raise last year?

Federal Reserve purchases of US Treasury Securities, monetizing the debt?

People are not spending money, wealth is being transferred into a few elite’s hands, and the economy is headed towards a monetary disaster.

Below are definitions of M-1, M-2, MZM, and MB from Investopedia.

M-1 is all physical money such as coins and currency; it also includes demand deposits, which are checking accounts, and Negotiable Order of Withdrawal (NOW) Accounts.

M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions.

MZM is a measure of the liquid money supply within an economy. MZM represents all money in M2 less the time deposits, plus all money market funds. MZM has become one of the preferred measures of money supply because it better represents money readily available within the economy for spending and consumption. This measurement derives its name from its mixture of all the liquid and zero maturity money found within the three “M’s.

The monetary base is the total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank’s reserves. This measure of the money supply typically only includes the most liquid currencies.