Thursday, November 3, 2011

Morning Update/ Market Thread 11/3 - Productivity Baloney. Tell Me Where Do the Children Play Edition…

Good Morning,

Equities are zooming higher this morning on hopes that the Greek government is falling apart and that the vote by the people on the crazy austerity measures will not happen! Nuts, as in literally insane. Buckle up, because the money explosion is happening in spades right now, the criminals are hell bent on creating money from nothing that benefits them, while simultaneously forcing austerity and inflation on the masses. The ECB CUT interest rates by .25% this morning, also fueling the money explosion – this will NOT help the situation, it will only make it worse. Rising inflation is the very worst thing that can happen for the economy at this point, the results will be far more painful for the masses, but it will take longer to realize just how painful it is.

Stocks were down 200 points, but then zoomed straight up 300 points on the continuation of the ridiculous Greek tragedy. The dollar is down, bonds are down, oil is higher, gold & silver are higher, and food commodities are higher but still within the range of the past few weeks.

Weekly Jobless Claims came in at 397,000, down from last week’s 402,000 which was revised up, of course, to 406k. For the past week the DOL reports that for unadjusted data, “The total number of people claiming benefits in all programs for the week ending October 15 was 6,781,960, an increase of 103,117 from the previous week.” The truth is that jobs are still being shed, as numbers need to be below 350k to reflect any sort of job growth, especially in relation to population growth. Here’s Econospin:
Jobless claims continue to come down but ever so slowly. Initial claims fell 9,000 in the October 29 week to 397,000, a decline partly offset by a 4,000 upward revision to the prior week to 406,000. The four-week average is slowly approaching the 400,000 level, down 2,000 in the week to 404,500. This level is more than 10,000 lower than the month-ago comparison and offers a moderately positive indication for the October employment report.

Continuing claims in data for the October 22 week fell 15,000 to 3.683 million with the four-week average down 10,000 to 3.704 million. A month-to-month comparison shows a roughly 40,000 improvement though declines in continuing claims reflect an uncertain mix of new hiring and benefit expiration. The unemployment rate for insured workers is unchanged at 2.9 percent.

There are no special factors in the data which point to improvement, however slow, in the jobs market. This report, coming ahead of tomorrow's monthly employment report, is likely to be a positive for the stock market through the session.

This morning’s Productivity & Labor Costs report shows the trend – lower costs for labor, combined with supposedly higher “Productivity.” Again, they are not measuring “productivity,” they are measuring cost of goods produced measured in dollars! When you are producing massive quantities of dollars, then “productivity” measured in dollars goes up. Yet, fewer and fewer people have any money to afford the higher prices created from money production that benefits only those who are closest to that money production while harming those furthest from it. Here’s Econoblind on the report:
Productivity picked up strength in the third quarter on healthier output. Nonfarm business productivity rebounded an annualized 3.1 percent in the third quarter after dipping 0.1 percent in the previous quarter. The market expectation was for a 2.5 boost for the third quarter. The output component improved to 3.8 percent from 1.8 percent in the second quarter. Hours worked increased an annualized 0.6 percent after a 2.0 percent rise the prior quarter. Unit labor costs fell an annualized 2.4 percent, following a 2.8 percent increase in the second quarter. The consensus forecast was for a 0.7 percent dip.

Compensation growth was soft, rising an annualized 0.6 percent, following a 2.7 percent increase in the second quarter.

Year-on-year, productivity was up 1.1 percent in the third quarter-up from 0.9 percent in the second quarter. Year-ago unit labor costs came in at up 1.2 percent in the second quarter, compared to a rise of 1.8 percent in the prior period.

Today's productivity report is favorable toward a continuation of growth in corporate profits with output up and labor costs down. But the negative is that businesses are still reluctant to hire.

To even attempt to spin this economy into a positive is a crime against humanity. Yes, money printing leads to higher “profits,” as measured in dollars, but measured any other way, it is a total loser of a proposition. And because our money is debt, more debt money will only work to kill real productivity and any velocity that our money had – witness our supposed GDP divided by the MZM money supply, M2 Velocity, and M1 money supply:

GDP Divided by MZM (Diminishing Productivity):

M2 Velocity:


Just look at the parabolic nature of your money! Here’s a clue for you, that trajectory is not sustainable! Those charts are THE reason why you are seeing protests on the streets, and they are becoming violent. “Other events,” major league events, are coming our way. It’s our fault for not putting an end to it sooner, but change, and very likely violence on a global scale, is now coming weather you like it or not.

Since we’re talking phony “productivity,” let’s revisit that great Kennedy quote to keep us focused:
“Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product...if we should judge the United States of America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.”
― Robert F. Kennedy

And just to underscore that sentiment, look at how Food Stamp use just rose to yet another all-time record of 45.8 million Americans:
Nov. 1 (Bloomberg) -- The number of Americans receiving food stamps reached a record 45.8 million in August, the government said.

The figure was 1.1 percent higher than the previous month and 8.1 percent more than a year earlier, the U.S. Department of Agriculture said today in a report on its website. Assistance rolls are increasing as joblessness remains at 9.1 percent of the workforce.

That equals 14.7% of all Americans on food stamps! There are your bread lines, and it is impacting our children very unequally. Note the Jobless 9.1% lie and how it is carried into the psyche by the media.

The good news is that when presented with a true solution outside of the central banker’s box, people seem to get it. Bill Still came out of nowhere, and thanks to your help, completely blew the field away in that recent Tennessee straw poll that just ended:

Any hope for a sane future for our children, America, and the world, rests on the people’s shoulders – your shoulders. The root of the problem is in the way private individuals have been granted the right to control the production of money – all other problems stem from that, and it is here where the people need to focus their energy.

"Productivity" my rear, nothing but money printing for the benefit of a few...