Unemployment

The Bureau of Labor Statistics announced last week the creation of some two million "seasonally adjusted" jobs and a reduction in the rate of unemployment to 8.3%

The press release was breathlessly reported by all the major media outlets across the nation if not the world, none of whom bothered to pull out their calculators and check the number.

The problem with 8.3% aside from the "seasonal adjustments" the formulas for which have never (to my knowledge) been explained anywhere, is the fact that millions and millions ... and millions and millions of Americans of employment age have and continue to be dropped from the count.

For a discussion of how these particular numbers get massaged by the Bureau of Labor Statistics, click on the first chart below for John Williams' outstanding primer at Shadow Government Statistics.

Take note of Mr. Williams calculated rate of about 23% and consider that unemployment during the great depression hit it's high of about 25% in 1933, which number I believe was calculated using Mr. Williams preferred method (the blue line).

The following chart is a simple history of the Fed Funds Rate since 2007.

The second chart is all over the place in multiple formats usually with a notation to note the decline since 1914 when the Fed came into existence with the expressed charge of preserving the purchasing power of the dollar.

The third chart demonstrates the comparable success of the Bank of England in it's pursuit of the exact same charge.

Remember when we were gonna fix that too big to fail thing?

Finally as stated, the total credit market debt owed from 2001 through 2010.

Have a pleasant evening.

From one of our favorite bloggers, Professor Mark J. Perry at the University of Michigan Flint campus, at his outstanding blog,  Carpe Diem.

" ... for every 100 jobs lost by women since the start of the recession in late 2007, men have lost an astonishing 219 jobs."

Click on the chart below for the entire post.

I like Porter Stansbury.

Many, many years ago I bought one of his newsletters, ended up not using it much and called and asked to cancel.

I'm pretty sure it was Porter that picked up the phone.

I had my money back on the next statement, no muss, no fuss.

That's a good businessman in my opinion.

Even if it wasn't Porter that picked up the phone.

The following is a piece he published for Casey's Daily Dispatch.

He's in a mood.

I don't blame him.

This Is Why There Are No Jobs in America

By Porter Stansberry
Saturday, August 21, 2010

I'd like to make you a business offer.

Seriously. This is a real offer. In fact, you really can't turn me down, as you'll come to understand in a moment...

Here's the deal. You're going to start a business or expand the one you've got now. It doesn't really matter what you do or what you're going to do. I'll partner with you no matter what business you're in – as long as it's legal.

But I can't give you any capital – you have to come up with that on your own. I won't give you any labor – that's definitely up to you. What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you're allowed to operate your business. That's my role in the affair: to tell you what to do.

Now in return for my rules, I'm going to take roughly half of whatever you make in the business each year. Half seems fair, doesn't it? I think so. Of course, that's half of your profits.

You're also going to have to pay me about 12% of whatever you decide to pay your employees because you've got to cover my expenses for promulgating all of the rules about who you can employ, when, where, and how. Come on, you're my partner. It's only "fair."

Now... after you've put your hard-earned savings at risk to start this business, and after you've worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you'd like to cash out – to finally live the good life.

Whether or not this is "fair" – some people never can afford to retire – is a different argument. As your partner, I'm happy for you to sell whenever you'd like... because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time.

I know... I know... you put up all the original capital. You took all the risks. You put in all of the labor. That's all true. But I've done my part, too. I've collected 50% of the profits each year. And I've always come up with more rules for you to follow each year. Therefore, I deserve another, final 20% slice of the business.

Oh... and one more thing...

Even after you've sold the business and paid all of my fees... I'd recommend buying lots of life insurance. You see, even after you've been retired for years, when you die, you'll have to pay me 50% of whatever your estate is worth.

After all, I've got lots of partners and not all of them are as successful as you and your family. We don't think it's "fair" for your kids to have such a big advantage. But if you buy enough life insurance, you can finance this expense for your children.

All in all, if you're a very successful entrepreneur... if you're one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public... you'll end up paying me more than 75% of your income over your life. Thanks so much.

I'm sure you'll think my offer is reasonable and happily partner with me... but it doesn't really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules – I'll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail.

That's how civil society is supposed to work, right? This is Amerika, isn't it?

That's the offer Amerika gives its entrepreneurs. And the idiots in Washington wonder why there are no new jobs.

An editorial from CNN Money the title of which pretty much explains it all.

Click anywhere below for the entire story.

A 30 second read, easy, small words.

Apologies for snide editorialization.

I'm starting to crack.

Raise taxes now -- the elders of the economy say so

Because, as we all know, all these guys really know what they're doing.

By Lex Haris, managing editor August 10, 2010:

NEW YORK (CNNMoney.com) -- First it was Greenspan. Now one by one other elders of the economy are speaking out against deficits, and they're making the surprising argument for higher taxes.

Former Federal Reserve chairman Alan Greenspan was first and has taken the most extreme position, arguing that all of the Bush tax cuts of 2001 and 2003 should be allowed to expire.

Greenspan, no fan of big government and an initial backer of the Bush tax cuts, allows that higher taxes now could lead to slower economic growth, but has said that chipping away at the deficit is more important.

Joining him -- at varying degrees -- are David Stockman, former budget director in the Reagan White House, and former Treasury Secretaries Robert Rubin and Paul O'Neill.

From The Wall Street Journal 8/10/2010, a letter from Michael P. Fleischer, president of Bogan Communications Inc of Ramsey, New Jersey.

Click anywhere below to link up Mr. Fleischer's letter.

Not a very tough read, recommended.

Why I'm Not Hiring

When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits.

By MICHAEL P. FLEISCHER

With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it's going to be later—much later. Here's why.

Meet Sally (not her real name; details changed to preserve privacy).

Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings.

She's been with us for over 15 years. She's a high school graduate with some specialized training.

She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

It's the arithmetic stupid. 

The Wall Street Journal Interactive put together an interactive chart for U.S. unemployment going back to 1948 which is in their words, "... the first year in which the government provides data that can reliably be compared with the current rate.

Clicking on the chart below takes you to the site.

I subscribe, but I don't think you have to in order to access the interactive site as there are comments from non subscribers.

I've been a subscriber to Chart Of The Day for a while now and find it to be useful.

Although I believe it might be more accurately called "Chart Of The Every Five To Eight Days Or So".

I mostly give them the benefit of the doubt and consider the likelihood that I'm just missing the occasional email.

Here's why even though you're really, really tired when you get home, you still get off your dead ass and help your kids with their Algebra.

Once they're gone, and you've become accustomed to an empty house, you might not want them moving back home.

 Jim Bunning

U.S. Senator from Kentucky.

Hall of Fame pitcher.

100+ wins, 1000+ strikeouts and a No-Hitter in each league.

Seemingly somewhat ill tempered, with an oversized pair of cajones.

I like him.

Always have.

The above photo links to the Baseball Almanac

This stuff has been floating around for about the past week in various formats.

Annual rate of change in employment for motor vehicle and parts manufacturing ................ -6.7% 

From the Associated Press

The number of Americans unemployed for 27 weeks or more in the US is over 5.9 million.

The most on record from 1948.

18% more than 90 days ago.

Long-term unemployment 38.3%.

Americans out of work for 14 weeks or less is 6.3 million, down from 7.1 million in August.

An 11% decline.

I've taken the occasional Porter Stansberry newsletter over the years, and have found the writing and the research to be good, the investment ideas, meh.

Porter says,

"Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt."

Porter's analysis?  They're gonna print it.

From Monty Guild, Guild Investments

Facts Evaporate Myths 

Myth 1. China is dependent upon exports to the U.S.

Of total Chinese exports, 38 percent go to emerging markets, 21 percent to the European Union, 18 percent to the U.S. and 8 percent to Japan.

Additionally, exports have fallen to about 14 percent of China’s GDP if you include only the value added in China.

Total exports including those partially manufactured goods brought into China from other countries (and which have value added in China before export), make up about 30 percent of China’s GDP.

The fact is that exports to U.S. make up somewhere between 2.5 percent and 5 percent of China’s total GDP.

Infrastructure and consumer sectors have replaced exports as the main drivers of China’s GDP growth.

Myth 2. Very little is manufactured in the U.S. any more.

Merrill Lynch provides us with the following facts ‘…the U.S. is still the largest manufacturer by a long shot, making up 20 percent of the world’s total manufacturing output.

Furthermore, when focusing on the value added (as defined by the World Bank), the U.S. contributes more than double the production of the next largest producer, China.’

Myth 3: The U.S. does not export much except software and weapons.

Fact: The U.S. is the world’s third largest exporter (Germany is number one, and China is number two).

The U.S. exports value added industrial chemicals and supplies, capital goods like production machinery, computer and telecommunications equipment, motor vehicles and parts, and aircraft and aircraft parts.

The U.S. also is the world’s leading exporter of food, feed, and beverages.

Additionally, many billions of dollars in consumer goods, medicines, and media and entertainment products are exported by the U.S. each year.