Only Two Points Left Meaningful in Payrolls; Both Look Downward

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

There are only two numbers in the monthly payroll report that have any meaning, and both came up quite short yet again. The first, as always, is the labor force itself as that population estimate more than any other indicates the relative station of the US economy. There has never been any time in recorded economic history where economic growth is satisfactory, let alone booming, and labor participation isn’t rising. As per usual, that continued to be the case, assuming the growing economy, in August.

The labor force was down another 41k last month and remains 115k below January. Since October 2012, the labor force has only added 1.57 million, of which 1.05 million was in January 2015 alone (a likely statistic discontinuity). That means an increase of just 523k where jobs are purported to have been solid and even highly expansionary. In the greater sense of economic advance, even the Establishment Survey’s addition of 7.7 million jobs falls short when compared to the 7.1 million increase in the civilian non-institutional population. None of these figures add up to much actual economic gain, which is the greater sense of the trajectory since the global economy slowed precipitously in 2012.

ABOOK Sept 2015 Payrolls LF

The second meaningful figure in the payroll report is just how much the Establishment Survey has itself decelerated. To my view, it is absolutely clear the upward bias in the “trend-cycle” component of the estimate which only suggests that the slowing of payroll gains in 2015 is “real” and thus highly understated to the degree at which it may be eroding. That is the view from the Household Survey, too, which more than suggests whatever the actual absolute change the direction is not in dispute. Continue reading

On CNBC discussing Greece and Europe – full transcript, 4th September 2015

Submitted by Yanis Varoufakis  –  The Yanis Varoufakis Blog

CNBC in London 3First on CNBC Interview: Squawk Box Europe Interview Yanis Varoufakis, former Greek Finance Minister

The following are excerpts from the unofficial transcript of a First on CNBC interview with Yanis Varoufakis, former Greek Finance Minister, aired on Friday 4th September on Squawk Box Europe. CLICK HERE FOR THE CNBC SITE OR…

CNBC: Welcome – nice to see you in person. Let me just ask you, you said in response to a journalist’s question that these are ‘sad elections’, but it is important that there is political stability of sorts for Greece going forward. Given that that’s the case, you’d be keen to see Syriza back in the driving seat, I imagine, after the elections are held?

I would most certainly want to see stability as you say, because Greeks have suffered enormously for quite a few decades to establish a democratic process that functions, and we have managed to do that, we have a well-functioning political democratic system and it’s important to preserve it. Having said that, what is of the utmost necessity, and has been for a few years now, is to have an economic policy – a reform agenda – which ends this extend and pretend nightmare of the last few years.

We constantly accumulate new debt, piling it up on already non-viable debt, pretending that we’ve solved the crisis, the debt deflationary spiral is enhanced, and the country becomes unreformable. It is something that the political system has not managed to address. Which party can do that now? The reason why I call this the ‘sad election’ is because I don’t think this parliament is going to be able to do it.

CNBC: So let’s be very clear, you’re not in the business of giving an endorsement to Mr Tsipras or to the Syriza party at this point, even though you are effectively of the Syriza party?

Well the reason why I’m not standing is because I cannot look my electorsin the eye, the people who voted for me last January, and say to them that our party, Syriza, is capable now, given the agreement that we have signed with the lenders, to implement a reform and fiscal agenda that may stabilise the economy. I believe that Alexis Tsipras, for whom I have a great deal of affection, and to whom I send my best wishes, believes it either.

In the parliamentary sessions where he was pushing for the endorsement of these agreements with the Troika, he himself said that this is, he called it, a ‘very difficult programme’, but in other interviews he has come clean on that, he considers it to be non-viable, as does the International Monetary Fund.

CNBC: Do you still consider Mr Tsipras a friend?


Continue reading

Whither The Economy?

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

The great problem with corporate capitalism is that publicly owned companies have short time horizons. Unlike a privately owned business, the top executives of a publicly owned corporation generally come to their positions late in life. Consequently, they have a few years in which to make their fortune.

As a consequence of the short-sightedness of reformers and Congress, the annual salaries of top executives were capped at $1 million. Amounts in excess are not deductible for the company as an expense. The exception is “performance-related” pay, which has no limit. The result is that the major part of executive pay comes in the form of performance bonuses. Performance means a rise in the price of the company’s shares.

Performance bonuses can be honestly obtained by good management or mere luck that results in a rise in the company’s profits. However, there are a number of ways in which performance bonuses can be less legitimately obtained, almost all of which result in short-term gains to executives and shareholders and long-term damage to the corporation and economy.

Replacing American workers with foreign workers is one way. The collapse of communism in Russia and China and the collapse of socialism in India resulted in the under-utilized Indian and Chinese labor forces becoming available to American corporations. Pushed by “shareholder advocates,” Wall Street, and large retailers, US manufacturing corporations began closing their manufacturing plants in the US and producing offshore the goods, and later the services, that they market to Americans.

From the standpoint of the short-term interests of executives and shareholders, this decision made sense. But to transform manufacturing companies into marketing companies, as happened for example to Apple Computer, which apparently does not own a single factory, was a strategic mistake for the long-term. By offshoring the production of their products, US corporations transferred technology, physical plant, and business knowhow to China. American corporations are now dependent on China, a country that the idiots in Washington are endeavoring to turn into an enemy.

Further downside comes from the fact that research, development, and innovation are connected to the manufacturing process, because it is difficult for these important functions to be successful in a sterile atmosphere removed from the production process. As time goes by, US companies are transformed from manufacturing enterprises into sales organizations and lose connection to the work process, and these functions relocate abroad with the manufacturing jobs. Continue reading

The Case for Outlawing Cash

Submitted by William Bonner, Chairman – Bonner & Partners

Losing Confidence

GUALFIN, Argentina – September is here. As expected, market volatility is increasing. The Great Zombie War is intensifying. And investors are getting scared. On Tuesday, the Dow lost 470 points – a nearly 3% drop. Bloomberg:

“U.S. stocks joined a worldwide sell-off, after equities’ worst month in more than three years, amid continuing concerns that China’s slowdown will weigh on the global economy.

‘The problem is, as much as China is the catalyst for this, it’s also that we’re seeing weakness in fundamentals here,’ said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York.

‘A lot of company earnings were hurt by China in the second quarter and it’s only gotten worse. People are losing confidence with the whole situation there breaking down, not just in the stock market but in data as well.’”

Burning_MoneyNow they even want to do away with the State’s own scrip – because it might help you to escape the depredations of madcap central bankers.

Image credit: Stephen Krow / Getty Images

Yes, investors are losing confidence…they’re probably losing confidence in corporate managers, for instance. Who wants to own stock in companies run by numskulls who buy back shares in their companies at record prices just before a major sell-off?

DJIA, dailyThe still yo-yoing DJIA – “investors” (we use the term loosely) came back out to play on Wednesday already, via StockCharts, click to enlarge. Continue reading

ECB QE Faces Reality

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

I don’t think Mario Draghi panicked, but China is as good a scapegoat as any at the moment. The ECB’s intended adjustment in the PSPP (QE) is cosmetic, but then again QE itself is pretty much only that to begin with. It seems pretty obvious given thedesperate lack of any positive impact from it so far, and the very large, gathering “unexpected” downside, the ECB decided to make some small change to at least give “markets” something.

The reason for that seems to lie in the lie of orthodox “stimulus” as it is practiced in the Japanese versions of late. In other words, the Europeans are counting on the euro almost as if they have finally seen that internal dynamics will never respond to raw monetarism. The ECB’s staff projections in this September update are at odds with themselves, none more so than in the overall guiding assumptions:

While the expected growth in advanced economies remains broadly unchanged compared with the June 2015 projections, the outlook for activity and imports in major emerging market economies has been revised down substantially. Accordingly, euro area foreign demand is projected to pick up at a noticeably weaker pace than entailed in the June 2015 projections. However, the past depreciation of the euro is still expected to exert a favourable impact on euro area export growth.

“Advanced economies” include Europe and the US only as a matter of the “transitory” inflation problems that are stubbornly unrelenting. In June, the ECB projected $63.8 per barrel for 2015 crude oil and $71 for 2016. This latest projection now sees $55 and $56, respectively – and these latest guesses, for all these statistics, not just oil, were compiled prior to the “dollar” breaking the PBOC on August 11.

That has left European “inflation” projections back to zero but more notably a downgrade in 2016; from 1.5% in the June update to just 1.1% (and from 0.3% for 2015 back to 0.1%). While that would seem to suggest QE’s effects aren’t estimated as remarkable, the ECB staff only reduced real GDP estimates by 0.1% in 2015 and 0.2% in 2016. Therefore, they expect the internal economy apart from “inflation” as if it weren’t a full part of what is affecting oil prices; nominal GDP is reduced 0.2% or so but real GDP only 0.1% in 2015, 0.4% in 2016 nominal but just 0.2% in real GDP. Continue reading

Will Uncle Sam Confiscate Gold Again?

Submitted by Mark O’Byrne  –  GoldCore

Investors suffered financial losses in recent weeks as stocks globally came under pressure in August and had their worst month in the last three years.

In one of the most volatile trading periods since the global financial crisis, August saw a massive $5.7 trillion erased from the value of stocks worldwide. No major stock market was left unscathed and the risk of financial and economic contagion became evident again.

There are growing concerns internationally that in the event of another Wall Street or global stock market crash and a new systemic crisis – a Eurozone debt crisis or another  Lehman Brothers collapse – there could be enforced bank closures or extended bank holidays in the EU and U.S. as seen in Greece recently.

The New York Times

In this scenario, deposit boxes and vaults in U.S. banks and financial institutions could be sealed and gold confiscated again.

There is a legal precedent for this. April 5th, 1933 – at the height of the Great Depression – was the day when U.S. President Franklin Delano Roosevelt instructed all American citizens to hand over all their gold coins and bars to the Federal Government. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

A Global Deleveraging On A Scale The World Has Never Experienced (CNBC)
Foreigners Flee Japan Stocks at Fastest Pace Since at Least 2004 (Bloomberg)
Europe Responds To Desperate Refugees With Razor Wire And Racism (WaPo ed.)
Hungarian Police And Refugees In Standoff After Train Returns To Camp (Guardian)
Greek Government Says €1 Billion Needed To Tackle Refugee Crisis (Kath.)
Greece Wants EU Funding To Tackle Migrant Influx (Reuters)
UN Calls For 200,000 Refugees To Be Distributed Across EU (AFP)
The Refugee Crisis That Isn’t (Kenneth Roth, Human Rights Watch)
Germany Presses Europe Into Sharing Refugees (Guardian)
Refugees Brave Europe’s Deadly Seas Over Wealthy Arab Neighbors (Bloomberg)
Cameron’s EU Dilemma Grows With Bigger Refugee Crisis and Bills (Bloomberg)
Refugee Crisis: Much More Must Be Done, And Not Just By The UK (Guardian Ed.)
The US Dollar Is Stronger Than Steel (Bloomberg)
The Oil-Sands Glut Is About to Get a Lot Bigger (Bloomberg)
Australia PM’s Decision To Drop Bank Tax ‘Bizarre’ (Afr)
A Secretive Agency Hunts for China’s Crooked Officials Worldwide (Bloomberg)
New York’s Pension Fund Pact With the Devil (HuffPo)
EU Parliament Claims Role In Greek Bailout Supervision (EUObserver)
Varoufakis: I Don’t Think Tsipras Believes In Bailout (CNBC)
Food Sovereignty (Beppe Grillo)
Regenerative Agriculture: The Popular Face Of Permaculture (Lebo)

Read much more here: Debt Rattle September 4 2015 –