Thursday, September 8, 2011

Morning Update/ Market Thread 9/8 - How to Bankrupt a Nation Edition…

Good Morning,

Of course you can’t have stocks higher and a good Jobless Report on the day the President is going to announce that he’s wasting $300 billion more of your future productive efforts – which by the way, amounts to $967 for every man, woman, and child in the united states. Family of four? That’ll be $3,868! Do you have it? How many families in the United States don’t have it? And remember, this is just the latest “great thinking” in how to “stimulate” our already debt saturated economy.

Next questions. When the government spends your money to “create” jobs, has it really created any jobs at all? Does money spent by the government really add to “production” and should it be counted in the GDP, especially when it’s done on credit? Oh yeah, where is the “money” coming from? Who profits from the interest on that money?

Yesterday’s 275 point rally? That’ll be $1.1 billion per point. Oh wait, it’s something more than that now.

And since the last $16 TRILLION or so, probably more, didn’t do a thing, are the people really gullible enough to believe that this will accomplish anything? The mainstream “experts” seem to think its “better than nothing,” and it will “stimulate the economy,” and too bad it’s not MORE. Oh, and the other take is that while the last “stimulus” wasn’t enough, it still worked to “create jobs,” even though there hasn’t been a single job added in the United States in well over a decade now.

Did it really “save” jobs? The answer is NO. Not only did the stimulus not save jobs, it is destroying jobs. Since we are way past macroeconomic debt saturation, the addition of more debt means more principal and interest that must be carried at the expense of real productivity and real jobs.

So, if you really want to bankrupt a nation, the United States has produced the perfect playbook. We were actually bankrupt quite some time ago, now we’re just step by step devaluing our money while we wait for “other events” to fully progress into the actual change that’s required to free our nation from the grips of criminal enterprise. The upcoming “election” won’t be it.

Oh, and if you want another example of how stimulus doesn’t work, just look at Japan were the Yen is worth next to nothing and where equipment orders continue to plunge while they wallow in their radioactive remnants.

Meanwhile, Weekly Jobless Claims continue to indicate that not only are we not adding jobs, but we are still shedding them even after years of that being the case. For the last week they rose from 409k up to 414k, a 5k weekly rise that econocomplicit calls a 2k rise since the previous week was revised higher once again. By the way, if you think the way these numbers are massaged is bad, you really don’t want to look at supposed corporate “earnings.” Let’s just say that “mark-to-model” is a great euphemism for the word “fraud,” and that’s just the tip of the fraud iceberg:
Jobless claims continue to hold steady, up 2,000 to 414,000 in the September 3 week (prior week revised 3,000 higher to 412,000). The latest gain and the prior revision are however going in the wrong direction, lifting the four-week average 3,750 to 414,750 which is nearly 9,000 above the month-ago comparison. The Labor Department said Hurricane Irene did not affect the data though it does expect a small 2,000 to 5,000 upward revision for the September 3 week. Four states had to be estimated due to Labor Day.

Continuing claims fell 30,000 to 3.717 million in data for the August 27 week with the four-week average up 6,000 to 3.735 million. The unemployment rate for insured workers, which has been edging back and forth between 3.0 and 2.9 percent since February, is at 3.0 percent for the fourth straight week.

The steady rate of jobless claims does not point to optimism among employers which, also based on payroll data, remain reluctant to expand their workforces. Watch for comments later today on the jobs market from Federal Reserve Chairman Ben Bernanke.

Nice sell for the upcoming theft of another $300 billion. If you have a job, I hope you have a few thou laying around to pay for it (Don’t worry, they won’t actually ask you for it, they’ll just devalue your purchasing power instead and you can make installments on it every time you fill up your tank or go to the store to buy your family some food.).

International Trade figures are out for the month of July – the pre-cliff month. The trade deficit narrowed, oh boy only $44.8 billion(!), primarily due to the fact that the price of oil was in free-fall for a good portion of the month. In fact, oil began the month at $100 and finished at about $85 with sojourns even lower. Again with Econohype:
Exports rebounded smartly in July, leading to a better-than-expected trade gap which narrowed to $44.8 billion from $51.6 the month before (originally $53.1 billion). The July trade gap was narrower than the consensus forecast for $51.9 billion. Importantly, exports rebounded 3.6 percent after dropping 2.2 percent in June. On the flip side, imports slipped 0.2 percent in July, following a 1.1 percent decline the month before.

The smaller trade gap came from shrinkage in all three major components. The improvement in the trade gap was led by the petroleum gap which shrank to $25.6 billion from $29.4 billion in June. The nonpetroleum goods gap also narrowed-to $34.1 billion from $36.6 billion the prior month. The services surplus grew to $15.8 billion in July from $15.5 billion the month before.

Looking at end use categories for goods, exports surged 4.8 percent while imports declined 0.3 percent in the latest month. The increase in exports was led by a $2.7 billion jump in industrial supplies, with increases also seen in capital goods excluding autos (up $2.2 billion) and automotive (up $1.3 billion). Modest declines were seen in consumer goods (down $0.6 billion) and food, feeds & beverages (down $0.1 billion).

The dip in imports by end use categories was led by a $2.5 billion drop in industrial supplies ($2.2 billion from crude oil). Food, feeds & beverages declined $0.3 billion. Import gains were seen in automotive (up $2.9 billion), capital goods excluding autos (up $0.3 billion), and in consumer goods (up $0.1 billion)

On a not seasonally adjusted basis, the July figures show surpluses, in billions of dollars, with Hong Kong $2.3 ($2.4 for June), Australia $1.7 ($1.4), and Singapore $1.2 ($1.0). Deficits were recorded, in billions of dollars, with China $27.0 ($26.7), OPEC $11.9 ($13.8), European Union $8.9 ($9.8), Japan $5.3 ($4.0), Mexico $4.9 ($6.4), Germany $4.2 ($4.0), and Canada $3.2 ($2.8).

Today's trade numbers are good news for manufacturers and for third quarter GDP. While today's jobless claims numbers were marginally disappointing, equities should like the export numbers. However, market focus is more on the speech by Fed Chairman Bernanke today and by President Obama on jobs this evening.

Major league Eyeroll please.

A lot of people were asking about “Operation Twist,” which is the next likely “Fed” trick. What “Twist” does is simply falsely and fraudulently shift short term low interest debt into longer term higher interest debt. Total debt still the same, although I can guarantee you that if you could really do the accounting it won’t as they’ll use their slight-of-hand moves to distract you. It will accomplish only delaying the inevitable, but it may not even accomplish that. In fact pretty sure it won’t. And don’t count on longer term rates coming down as they say, I call BS. What I think will actually happen is they will simply “use short term debt to buy long term debt,” and then on the back end they will refill, and refill, and refill the short term debt. In this manner they would be QEing still more, with the difference being they would be using the proceeds to buy down rates on the long end. In short, I think it will amount to more money printing and more deception, with a harder trail to follow, not that you can actually follow their trail now.

Remember, it is the bond market that is their power base, they are doing anything and everything they can in order to keep their house of cards from collapsing. It has already collapsed in reality, again we are just waiting for the “other events” to fully materialize.

Another “Stimulus,” another failure…