Why I'm Not Buying Into the Improved Economy Hype

The nation is cheering. Unemployment has almost normalized at 5.5% (thanks, Obama!). It might have taken awhile but we clawed our way out of the depths of despair and are on our way to lift off. Or are we? When you dive into the employment numbers and look beyond them, the picture isn't so rosy.

While the media has been cheerleading the recovery and posting headlines about the unemployment numbers, they haven't been as vociferously posting the macroeconomic data. Whenever the mainstream media endlessly harps on one story, it's a good bet that they're trying to distract you from the real story somewhere else. In this case, it would be the terrible macroeconomic data that's been coming in since the end of QE3.

In fact, since February alone we've seen 48 data misses and only 8 beats. Let that sink in for a minute. That's not even close. And much of that negative data is the kind of misses or month after month negativity that is only seen during recessions, yet the stock market ignores that bad news and only seems focused on the employment numbers.

Labor force participation rate is at historic lows. Defenders of the government numbers will argue that it's because of all the Baby Boomers retiring, but there are plenty of people who have pointed out that "... the participation rate for those 55 and older is as high as it has ever been historically. The participation rate, unfortunately, for those in the 25 - 34 demo, that’s 4% lower than before the crisis." Recent college grads and highschoolers looking for their first jobs are still struggling to find work. Meanwhile, Boomers are finding that they can't retire and have to stay in the workforce for longer than anticipated. 

                                    

Meanwhile, we still have a record number of people on food stamps. A robust recovery would see record low numbers of people needing assistance, not record highs.

Yet another reason to doubt the BS coming out of the BLS has to do with the huge discrepancy in estimated job losses in the energy sector. According to last month's BLS report, only 1,100 energy sector jobs were lost in February. However, Challenger, Gray & Christmas, a notable Chicago-based firm that specializes in outplacements, downsizings, and plant closures, claims there were 16,000 energy jobs lost in February. Sixteen thousand. That's a huge discrepancy. With the months long tumble that oil prices have taken and a recovery in prices far from sight, which number do you think is more believable?


                                  

Paul Craig Roberts, former Assistant Secretary for the Treasury under Reagan, also threw cold water on the latest jobs numbers. Here's his assessment:

"The 295,000 claimed new jobs are highly suspect. For example, the report claims 32,000 new retail jobs, but the Census Bureau reports that retail sales declined in December and January. Why would retailers experiencing declining sales hire more employees?

Construction spending declined 1.1% in January, but the payroll jobs report says 29,000 construction jobs were added in February.

Zero Hedge reports that the decline in the oil price has resulted in almost 40,000 laid off workers during January and February, but the payroll jobs report only finds 2,900 lost jobs in oil for the two months."

Something isn't adding up. Noted economist Peter Schiff, who was out there early and often warning about the 2008 housing bubble, has been documenting weekly (his podcast on the latest jobs report is here) the lack of recovery we're seeing and predicting an even bigger crash in the near future than the one we've supposedly just recovered from. Why another crash? Because the Federal Reserve hasn't reversed course on anything and instead is doubling (tripling?) down on the same failed policies that crashed the economy in 2001 and 2008. But you can only reinflate the bubble so many times before it ultimately pops for good.

Sorry, folks, but you can't print your way to prosperity, which is essentially what the Federal Reserve has been trying to do since the inception of its quantitative easing programs. Only a gang of economists (or Congressmen) would think that piling debt on top of debt, borrowing trillions of dollars, and printing an endless stream of money won't end badly some day. They're just hoping it doesn't happen on their watch, like a game of hot potato and hoping they're not the ones caught holding the potato when the music stops.

For a further explanation of why what the Federal Reserve is engaging in will only lead to further pain down the road, I refer you to this short video of historian and Austrian economist (Austrian as in the Austrian school, not Austrian in nationality), Tom Woods, discussing how Austrian business cycle theory explains these economic booms and busts that everyone else, including and especially those at the Federal Reserve, seem to think just come from out of nowhere.

I'm not an economist but I've been doing a lot of self-study in economics over the last few years. As a former liberal, I realized how woefully uninformed about economics I was previously, which of course explains why I was a liberal. Perhaps I'm wrong and I'm subscribing to the wrong economic theory. But no matter which way you slice it, we're $18 trillion dollars in debt, that's $18,000 billion dollars to put it in different terms (by comparison, Warren Buffet, one of the world's richest men, is only worth $76 billion dollars), with no sign of slowing down.

We have placed the central planners at the central banks on pedestals, almost revering them as deities, and allowed them to perform experiments with unfathomable sums of money, usually in secret because we can't fully audit their books, and think that this small group of humans somehow has enough accumulated knowledge amongst them to make fiscal and monetary decisions for the other 310 million of us. If that seems absurd that's probably because it is. Along the way, your government has been lying to you about the real state of the economy leading people to believe in a recovery that wasn't real.

I hope I'm wrong but anyone with a wit of common sense can see that something ain't right, no fancy economics degree required (probably better that way as those with the degrees are the ones most blind to the realities of the situation!). I suspect in a matter of years, or sooner, we'll know one way or another. Maybe by then you'll be able to throw this blog in my face and I'll humbly eat crow. If not, watch out below!

Government Saved Us!

For those of you who read my last blog, it will come as no surprise that the very scenario I predicted in the Grand Shutdown Opera has at last come true. The scenario being that the GOP would cave on pretty much everything, their grandstanding would all be for nothing, and Obama and the Dems would come out smelling like roses.

How did I know this was going to occur before it even actually happened? BECAUSE THAT'S WHAT HAPPENS EVERY TIME. I can't remember the last time anybody in either party took a principled stand that had any measurable effect on policy. I'm fairly young so I'm sure it's happened but maybe I wasn't around or not paying attention at the time that it happened. But it's also about understanding the very nature of government. The ones who might actually give a crap about the American people are few and far between. Like I said, I'm fairly young but I've already figured out that government is a sham. There are the
power players at the top who are the ones who

really pull the strings. This includes the President, House and Senate leadership of both sides, the career politicians, and the ones behind the scenes who we don't even know about. The ones who give a crap aren't at the top. They're at the bottom; they have little to no clout, they're often lampooned or ridiculed by the government mouthpiece media or Establishment politicians, and their common sense bills usually run up against a brick wall. Knowing this, it was not hard to predict from a mile away that this whole shutdown charade was going to go nowhere.

It also doesn't help that our bought and paid for government controlled media dutifully reported all of the exaggerations, falsehoods, and flat out lies that were spoken by President Obama and his cronies in Congress without question or examination. Let's point out a few, shall we? On September 18, speaking to a group of CEOs at a Business Roundtable, Obama rattled off the following absurdity:

"Now, this debt ceiling — I just want to remind people in case you haven’t been keeping up — raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy. All it does is it says you got to pay the bills that you’ve already racked up, Congress. It’s a basic function of making sure that the full faith and credit of the United States is preserved."

I'm sorry, WHAT?! How does this man get away with such blatant and outright LIES? How is it that our mainstream media does not trumpet the lies as BREAKING NEWS on the airwaves or as a front page headline?! Of course, the conservative media picks up on this immediately, but they're just preaching to the choir. So what's the rest of the media's excuse?

The sad thing is, is that I've heard and been engaged in many a Facebook debate recently where liberals will spout off this very line. I don't think Obama is stupid. I don't think he actually believes what he says in this instance. But he knows that if he says it, masses of our dumbed down, uninformed, unthinking, naive populace will buy it hook, line, and sinker. He also knows that none of the mainstream media will challenge him on this point. Oh they'll report on it, they'll repeat it, but they'll do it with a completely straight face and no mention of the fact that he's flat out WRONG.

How can anyone actually believe that raising the debt ceiling DOESN'T increase our debt? Why else would we need to keep raising the friggin thing if it didn't actually increase the debt? Duuuhh. What does he think we are, morons? Oh wait...

Obama and his cronies' other masterful use of doublespeak was their repeated insistence that if we do not raise the debt ceiling that it will result in default. This was parroted ad nauseam by virtually all of the MSM outlets.  
  

 

MORE: Senate passes bill to avoid default, reopen government; now heads to House and expected passage: http://t.co/IxDjt1kMTb -SS
— The Associated Press (@AP) October 17, 2013

Notice the headline, "Senate passes bill to avoid default...". Hundreds more versions of the exact same headline were printed everywhere across the country, concealing the reality that we were never going to default! The US government takes in ~$250 billion dollars per month in tax revenue. Our monthly interest payments on the debt are ~$20 billion dollars, 10 times less than our tax revenue. The only way we were going to default on the debt was if President Obama chose to default. Didn't mention that, MSM, did you? Of course not.

That's not to say that we wouldn't have had to make some painful decisions about government spending, because in order to avoid a default, we would have had to pay our bills. This point has completely been missed by all of the lemmings in the media. If we hadn't raised the debt ceiling, we would have had to start making cuts to our government because right now our tax revenue doesn't cover it. Raising the debt ceiling means we're able to borrow more money so that we don't have to pay our bills; we can keep papering over the fact that we are completely broke. Peter Schiff makes this point brilliantly in his most recent video blog, cutting through the spin and BS that the MSM serves us everyday.

Presently all across America, people are popping the champagne, the confetti streamers are falling, the balloons have floated to the ground, and we can all breathe a collective sigh of relief since President Obama and our saviors in Congress have averted near disaster. We can all sleep tighter tonight knowing that we will keep piling on the debt for another few months, that we have sold out the future of our children, and we have showcased for the world our complete and utter idiocy, instilling confidence in our creditors and investors worldwide. Oh, and did I mention that we still have Obamacare?

There's an old refrain that goes, "Government is good at breaking your leg, handing you a crutch and saying 'There, without government you couldn't walk.'" This government shutdown theater has demonstrated another such example of government loudly and publicly saving itself and the American people from a completely self-made crisis, patting itself on the back for doing so, and expecting the American people to congratulate them on it. We knew this day was going to come. We've known about it since we went through this dog and pony show the last time. Why did we only start talking about it again mere weeks before we were about to reach the debt limit? Why didn't they start holding rounds of discussions immediately after the last debt ceiling crisis to start addressing the whole underlying cause of the present debt ceiling crisis: the debt? Shouldn't that be considered failed leadership? That's what I consider failed leadership. In the twisted world of our government, however, the Democrats are congratulating their anointed leaders for their leadership in the continued herding of the American people down the path of debt slavery. Then we get to wait four months and the Dems and RINOs in Congress will again don their capes and fight this same fight again, courageously standing up for what is good and right in American by telling us that we don't have a spending problem and if we could just borrow more money from Japan and China, all will be right in the world.

Sad thing is, I don't know if those in Congress actually believe their own lies, but they sure do have most of America fooled that this won't have any consequences. They're living in the Keynesian fantasy land that we just need to keep spending trillions more dollars stimulating the economy and once that happens we'll magically be able to grow our economy enough to be able to pay back our debt, however many tens of trillions it might be at the time. Or if not, it doesn't matter because we'll also magically be able to keep interest rates at zero forever so we won't ever have to worry about rising interest rates wreaking havoc on average Americans and the government debt servicing payments. Or if not, it doesn't matter because our creditors don't ever actually want to get paid back because we all know that the dollar will be reserve currency forever so they're happy to hold onto our dollars indefinitely and lending us money even though we've had the printing presses going at full bore since the crisis began. If you believe all this, I have a bridge to sell you.

What happened today would have made George Orwell proud. It reveals the level of indoctrination and education we've been exposed to in this country for the past few decades when we cheer on an effort that impoverishes our nation. We now live in a country where Debt equals Wealth, Truth is Treason, War is Peace, and Freedom is Slavery. We're like a dog that follows the line of free treats not realizing that it leads straight to a cage. Yup, government saved us all right. Time to celebrate.