By David Malone 
So I’ve been away for an age. Sorry about that. Filming is now over and I am catching up with domestic duties. The children look reasonably tidy and washed and meals are abundant if sometimes a little surprising.
So let’s see …
By David Malone
So I’ve been away for an age. Sorry about that. Filming is now over and I am catching up with domestic duties. The children look reasonably tidy and washed and meals are abundant if sometimes a little surprising.
So let’s see …
Greece is heading for a blow out with its bond holders. Greece wants/has to have its private bond holders accept at least a 50% ‘haircut’ on what they are owed. The bond holders have said ‘No!’ to accepting their share of the losses. The ECB has come clean that it will not accept a loss on the Greek bonds it now holds either. If it did so it would put a large dent in its ability to claim all is fine with the ECB and it can keep lending and printing on any scale for any length of time.
Portugal is now openly muttering about how it needs another 30B or so bail out. Ireland is looking to run out of its own cash in about 6 weeks at which point it will have to once again tap in to its credit line from the ECB and IMF.
Which brings up the ECB and its now fairly clear plans to issue/print another 650B to 1T in new Euro debt in what it calls its LTRO (Longer Term Refinancing Operations). More on this later.
And not to be out-done in competitive printing and currency manipulation Mr Bernanke just announced that the Fed would be buying up more bonds again in what the markets are already calling QE 3.
From Bloomberg quoting a response to Bernanke’s statement.
“It was an unambiguous, aggressive statement,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “My expectation is that we are going to get quantitative easing three in April,” she said, referring to a third round of bond buying.
Meanwhile Japan has posted its first trade deficit since 1980. From Reuters,
Japan’s first annual trade deficit in more than 30 years calls into question how much longer the country can rely on exports to help finance a huge public debt without having to turn to fickle foreign investors.
As the article goes on to say this doesn’t mean Japan will have an overall trade deficit because it still get lots of foreign currency income from its huge investments. But it does mean the overall flow of foreign currencies flowing in to Japan is lower and income from companies exporting to the rest of the world is lower.
Which is rather important for Japan. Because it is the foreign cash flowing into Japan’s exporting companies which is then deposited in to Japan’s moribund banks who can then leverage that money by 10-20 times and that larger amount of ‘new’ money is what is used to buy up Japan’s massive (now over 200% of its total GDP) debt.
Without that flow of new cash, Japan’s banks, pensions and state funds will no longer be able to buy up the vast and still growing debt issuance which is the ONLY thing keeping Japan ticking over. Stop that flow of new debt being issued and Japan will melt down in much the same manner its nuclear industry already has.
And yet … according to our leaders and their loyal press corps all is going according to plan and even, in a certain carefully controlled light, going well.
From Bloomberg again,
Employers added 200,000 jobs in December, twice the previous month’s pace, and the unemployment rate dropped to 8.5 percent from 8.7 percent the month before. Household wealth has also gotten a boost from rising stock prices, with the Standard & Poor’s 500 Index of stocks climbing 5.4 percent this year through yesterday.
And this from the January 6th 2012 US Bureau of Labor Statistics report,
Both the number of unemployed persons (13.1 million) and the unemployment rate (8.5 percent) continued to trend down in December. The unemployment rate has declined by 0.6 percentage point since August.
So really, I ask you, what are people like me going on and on about?
Well let’s look again at the quote from Bloombergs ‘Pangloss Times’ piece. Jobs are up, unemployment down. Hurrah! But wait … from the latest Economic Newsletter for the New Millennium, comes this chart based on some of the detail obscured beneath the happy headlines in the report from the BLS
Just to explain, the Labour Force Participation rate, which this chart shows declining, is the percentage of the whole work force (those of working age not in prison or the armed forces) who are ‘participating’ in the labour force. And ‘participating’ in the labour force DOESN’T mean being in work. It includes both those working and those LOOKING for work. So this chart says that the total of employed and unemployed is going down. Odd!
Odder by far is that this is happening while the actual overall population is going up.
Between beginning 2009 and end 2011 the civilian US workforce went down by 298 000. While over the same period the population went up by 5,845,000.
More people, smaller work force. And remember the work force is those of working age only. It excludes those who have reached retirement age.
These figures do two things. First as the New Millennium Newsletter points out the official figures indicate that the same official figures have been under-reporting the number of unemployed by a whopping 7 million. Which drops a bunker buster bomb on top of Mr Obama’s and Bloomberg’s Happyville fantasy. Adjust the official figures just so they agree with each other internally and US unemployment goes from 13 million unemployed to 20 Million! Or from 13% to 20%. This is what is called the U3 figure.
The wider measure of unemployment misery called U6 which includes those who are employed but only in part time work which does not cover their living costs and which they would like to exchange for a proper job – that measure – gets raised from 15% to 19.9%.
None of this is news. Many have written about this for years. But it shows how those who govern/manage us continue to intentionally mislead us and lie to us year after year.
I would like to add one more fairly obvious point. These figures unambiguously show that people of working age are simply dropping out of the workforce. They are not dying. Deaths are accounted for elsewhere in the figures. They are not joining the army nor going to prison. Those too are counted elsewhere. They are simply no longer trying to find work. And yet they still need to eat. So what is happening to them?
It is bad enough that rather than ask that question the government is simply happy to let those people quietly disappear and use their absence as a way of pretending unemployment is better than it actually is. But far worse it ignores completely what they are actually doing.
America has millions of people who are either utterly destitute or they are making their living in the undeclared or criminal economy. As many as 7 million people. People who the government would like to simply flush away and pretend they never existed. Now it’s easy to say they are all drug pushers and pimps, and some are. But many were and still are, decent Americans who had jobs, children, homes and hopes and now have none of these things.
But the bankers, politicians and media don’t want to talk of them. The disappeared are just that – disappeared. And even those who have got one of the new jobs – what are we told of them? They have a job, they are not one of the unemployed – Hurray.
They are probably hugely grateful. But do we hear of their lower salary? Or of their ‘flexible’ hours, meaning work whenever, no matter what havoc that plays with any attempt to be a good parent? Or of short contracts and zero benefits in a McJob which probably provides very little prospect of saving or a career pathway to something better.
So yes they are employed and that is good. But is the new economy and its ‘recovery’ made as it is of such jobs, the foundation for a fairer, more equal society, where the majority have the power and energy to hold the powerful to account and to exercise democratic power over those who buy and sell their futures? No it helps ensure a frightened, cowed, just above the poverty line workforce who will not feel they can complain about anything or anyone.
Which brings me to the second sentence in the Bloomberg quote,
Household wealth has also gotten a boost from rising stock prices, with the Standard & Poor’s 500 Index of stocks climbing 5.4 percent this year through yesterday
Ah household wealth. One of the modern world’s many anaesthetic phrases. Utter it and already troublesome doubts and thoughts are soothed away.
Whose household? How many households own or get their income from stocks and shares. And if they do own some, how many? We know from yet other government figures that 10% of America’s households hold 90% of the wealth in any form. 1% of American households hold 50% of that wealth.
Even if you count insurance schemes and pension schemes – the vast bulk of American households own negligible amounts of any of these things. How much benefit do you think the 45 million Americans on Food Stamps are going to get from the rise in stocks and bonds versus how much will the world’s bankers make from the same stock market ‘boost’?
Bloomberg and our politicians, when they tell us how much better ‘the economy’ is doing, are in fact telling us how much better they and people like them are doing.
The fact of the matter is that when our leaders are telling us, through crocodile tears, that there have to be cuts in what the government spends on health, welfare, education and all other services, they are somehow able, at the exact same moment, to miraculously find hundreds of billions in the public purse to buy billions of bonds and failing loans in order to ‘help’ the banks.
Does our media question this? No they do not. Banks we can afford to fund. Schools, no. One is public debt and is therefore to be abhorred and cut. The other is ‘necessary investment’.
And on top of it all arses like Jamie Dimon, the CEO of JPMorgan, spend millions on hobnobbing with our Uriah Heap leaders at Davos, so he can regally condescend to accept both their fawning compliments and their bail-out billions for his bank ($28Billion) and then take the opportunity to complain to the simpering media that anti-banker sentiment is a form of discrimination and should be stopped.
I can think of many things which should be stopped. Anti-banker sentiment is not one of them.
Courtesy of David Malone – http://www.golemxiv.co.uk
David Malone is the author of the book Debt Generation. You can read and listen to excerpts from his book here: http://www.debtgeneration.org/index.php