It’s Saturday morning, and for the past 24 hours, I have been dying to expand my initial take on yesterday’s punk NFP “jobs” report – as discussed in my “deformation explosion” Audioblog. Since then, my mind has been exploding with additional thoughts of the incredible, dire ramifications of its publication – which is why the Miles Franklin Blog is such an amazing, real-time communication tool.
Given it’s a holiday weekend, there’s little news flow to distract me. That said, the theme of March 19th’s, “oil, Greece, and the Fed” article – that these three issues are atop our “most likely to catalyze the big one” list – has never been more prescient. In Greece, things are getting so bad, an April 9th default – i.e., this coming Thursday – is eminently possible, over a measly €450 million interest payment. Perhaps they’ll squirm by this deadline, but the list of such deadlines is endless, and the amounts involved will continue to grow. Moreover, the collapsing Greek economy requires more debt each day. And thus, calls by its increasingly “anti-austerity” population to “Grexit” the Euro – and default on its €400 billion of debt – will inexorably grow.
As for oil, Friday’s American-led extortion of Iran – which, comically, John Kerry wants a Nobel Peace Prize for – will dramatically worsen the unprecedented, horrifying oversupply of the world’s largest, most important commodity market. To wit, in a world where supply is already a million barrels per day – or more than 1% – above demand, an Iranian sanctions repeal will likely cause the imbalance to swell to nearly 2.5 million barrels – let alone, if the expanding global recession causes demand to decline; as since the sanctions commenced in mid-2012 – led, of course, by the U.S. – Iranian crude exports have plunged from 2.5 million barrels per day to barely 1.0 million.
Moreover, Iran possesses nearly 10% of the world’s known proven oil reserves, and is one of the lowest cost producers as well – at roughly $10-$15/bbl, compared to $50-$100/bbl for U.S. shale producers. Worse yet, Iran is in such dire financial straits (care of said sanctions), it will likely do anything to increase revenues – like swamping the already oversupplied crude market. Perhaps this is why a four-mile line of tankers, desperate for cargo given how rapidly global transportation demand has collapsed, has formed in the Persian Gulf – praying waiting for Iranian terminals to accept them.
Adding insult to injury, a new study projects that due to a combination of factors – including tax incentives set to kick in this summer – U.S. oil production will continue to rise for the next five months, irrespective of plunging prices and rig counts. And talk about chutzpah; whilst California’s government has decreed draconian water rationing rules upon its 39 million citizens, amidst its worst (and expanding) drought in centuries, the oil and gas fracking industry has been exempted. In other words, shale oil drilling – ironically, in America’s most environmentally sensitive state – will continue to be permitted to use two million gallons of fresh water each day; thus, destroying California’s environmental viability as rapidly as it is destroying America’s finances. And thus, to the newly formed “oil PPT” – whose footprints and brazenness are as obvious as the Gold Cartel – we can only say “good luck, you’re going to need it.”
Back to the NFP report, I didn’t have time to go over the gory details yesterday morning, which made it far worse than even the ugly headline figures reported. Not that I haven’t discussed such damning “internals” for years. However, along with this less watched data, the propagandized “headline figure” printed at half of “expectations“; whilst the labor participation rate hit a new 38-year low (and an all-time low for men); and the weather had nothing to do with it. In other words, the headlines numbers were so bad, the horrible internals didn’t even matter. And yet, they were present as usual – like the fact that, as always, the only age category to have registered positive March job growth was 55+; i.e, senior citizens that can no longer afford retirement – and thus, take the low-paying, non-benefits accruing jobs that younger generations so badly need. This is why U.S. entitlement growth is exploding whilst new business and family unit formation is at record lows; and consequently, why savings and home ownership are at multi-decade lows for the “99%” not privy to free Federal Reserve funds and rigged financial markets. Heck, even the inexorable, statistically suspect growth of low-paying, non-benefits accruing “waiters and bartenders” abruptly collapsed in March; a category, I might add, that was highly questionable in the first place, given how the weakening economy has dramatically impacted demand on both the fast food and mid-tier service restaurant industry. I’m sure high end restaurants where the “1%” dine are doing well, but there aren’t enough of them to make a dent in the labor force.
Of course, all such “analysis” supposes the reported NFP numbers are true – which we assure you, they are decidedly NOT. Most likely, they are a lot worse; and clearly, a mosaic of empirical and anecdotal evidence – particularly when expertly interpreted, as by John Williams of Shadow Stats – depicts a labor market in Depression Era condition; only this time around, more of the so-called “jobs” are part time, with far fewer people receiving benefits – such as health insurance, which I recently deemed a “mythical unicorn” as it has become so rare. Throw in the fact that it’s impossible to precisely measure the labor market – or GDP, inflation, or factory orders, for that matter – in a $15 trillion economy; which frankly, could just as easily be deemed $10 trillion or $20 billion, depending on what “assumptions” and “adjustments” one makes, and you can see why the NFP report is a joke and a half to start with.
That said, the trend is indisputably weakening, and dramatically so. Which is why, via the advanced “weapons of accounting destruction” available to the BLS, BEA, and other government book-cookers – much less, the complete lack of regulatory oversight – the government has been publishing “whatever it wants.” To that end, consistent with the theme of last year’s “all economic data are lies,” consider this horrifying news from yesterday, of the Japanese government admitting its published 2014 wage growth figures were a complete sham. Or, for that matter, the BLS’ admission that 69,000 of the so-called “jobs” initially reported in January and February – creating the “much better than expected” results that were used to expand the “recovery” lie further (and smash Precious Metal prices, of course) – turned out to have been a “mistake.”
Let’s face it, in a world of rigged data, commandeered financial markets, and a “1%” with both the means and incentive to further the lies, a delicate, “suspension of disbelief” has been fabricated amongst the nation’s power base; which unfortunately for them, is so fragile, an angry “Economic Mother Nature” has been slowly but surely breaking it down. To that end, yesterday’s horrific NFP number, no matter how or why it was produced, will unquestionably cause an enormous amount of damage to said veneer – perhaps, permanently so.
Back to the report, as I have noted for some time, the BLS can – and does – report essentially whatever it wants. For example, when more than three million actual jobs were lost in January – largely due to seasonal factors – BLS algorithms arbitrarily decided 239,000 jobs were “created”; enabling a “better than expected” report that, as noted above, enabled furtherance of the “recovery” propaganda and financial market manipulation that form the base of the aforementioned “deformation explosion.” Of course, said “239,000” January jobs was reduced to “201,000” yesterday. Moreover, after several years of “benchmark revisions” – some of which will undoubtedly be calculated on “apples-to-oranges” bases, said “239,000” jobs could just as easily be “139,000” as “339,000.” In fact, such statistical algorithms have become so (purposefully) complex – just as the PPT’s trading algorithms, I might add – that the NFP report has been completely converted from an economic metric to a political and monetary policy tool; used in concert with relentless Washington rhetoric, MSM propaganda, and Wall Street market manipulation. Clearly, this “game” is in its terminal phase, as the entire world is starting to realize what the economic reality is – let alone, that the U.S. has in no way “decoupled” from the rest of the world. Which is why it’s so interesting that the BLS decided to “adjust” March’s numbers into such a horribly bloody monstrosity of a “miss.”
Recall, we have discussed ad nauseum how fiat currency regimes are Ponzi schemes that must grow larger to survive – as exemplified by the “ZIRP” and “QE to Infinity” programs currently plaguing the planet. Also, how real economic data – such as retail sales, personal consumption, construction spending, factor and durable goods orders, the Baltic Dry Index, and even the Fed’s own, upwardly biased GDP tracking system have dramatically worsened; making it more and more difficult to lie about. This is why the Fed no longer uses the “unemployment rate” as a factor in its policy decisions; and why – “island of lies” data strength aside – it continues to delay the mythical rate hikes it so badly wants you to believe are coming; to the point that last month, it issued its “most unequivocally dovish FOMC statement in memory” to Congress, and followed up such dovishness with an exclamation point at its regularly scheduled meeting. Clearly, the “countdown to the Yellen Reversal” we discussed last Fall has reached the “single digits”; and with not only the economy in freefall, but Whirlybird Janet’s only hope of re-appointment contingent on a Hillary Clinton victory – not to mention, not so subtle “orders” from the White House to get the dollar’s foreign exchange value down – the incentive to step up the dovishness has never been stronger.
Just three weeks from now, the April 29th FOMC meeting will be Whirlybird Janet’s next opportunity to talk rate hikes down; and if the economy continues to weaken – which it certainly will – to perhaps, initiate said Yellen Reversal; or at the least, a “Yellen Reversal Lite,” in which the Fed admits the economy is flat-lining at best – and consequently, the risks to the downside are now equal to those of the upside. In other words, setting the table for the QE4 (and perhaps, NIRP) that must eventually be launched.
Basically, yesterday’s “126,000 job lie” was no different – in terms of statistical insignificance and book cooking – than usual. However, in this case, the government chose to publish not just a “worse than expected” number, but much worse than expected. Which, in my view, was no less of a policy decision than the prior two months’ much better than expected NFP fabrications. The immediate aftermath were plunging stock and interest rate futures – and if the COMEX were open, gold and silver prices would undoubtedly have surged. However, what remains to be seen is how rigged markets react in the weeks leading up to the April 29th FOMC meeting – as if the various “manipulation operatives” fail to regain control, the Fed might be forced into additional doses of monetary heroin stimulus, in an attempt to not only avoid instantaneous economic implosion, but – per the White House’s request – score a major “victory” in the “final currency war.”
And when that day comes – be it April 29th or shortly thereafter, if you haven’t already protected yourselves with the time-honored wealth preservation attributes of physical gold and silver, you may never get the chance; certainly, at prices even remotely near today’s suppressed, fire-sale levels.
A correction to be completely accurate which I know you would want. At http://www.wattsupwiththat.com you will find the facts by searching their site that California is not having the worst drought in centuries, at least not yet and not in even the last 100 years. You look to Shadowstats and rightly so for John is on the money. So they are also at WUWT!
Perhaps hyperbole, but considering California’s – and America’s – financial condition, the impact will be devastating at current drought levels, and catastrophic if it worsens.
You are spot on about the financial aspect so no contention there. Here is the link to the article in case you want to see how much information (just like you do) is put out on subjects on the website. They have over 226 MILLION views Thanks. Ken
There are as many black swans lined up as there are now oil tankers at Iranian oil terminals.
But what I still have a problem wrapping my head around is, post fiat ponzi scheme meltdown, what does that world look like. So I buy tons of gold and silver from Miles Franklin.
Currency reset, hyperest of hyper-inflation, whatever, I have my gold and silver store of wealth. If markets are still functioning, the PM prices skyrocket, but more importantly, my wealth doesn’t torpedo in dollar terms.
If markets fall apart, there is no price discovery for gold and silver. I can’t see society scraping off little pieces of gold to buy stuff.
More likely, government intervenes and after infinite rounds of committee dog and pony shows, they establish a gold standard again, re-enact Glass Steagall x 100, and the *government* sets a *fixed* price for gold and silver. From my understanding, this is how it used to work – X dollars were convertible into Y oz. of gold. In addition, if the U.S. government didn’t have the gold, it couldn’t print, which kept spending in check.
What is to say government doesn’t set gold’s price to $500/oz and silver to $6.66?
The U.S. Constitution will hopefully still be in existence. The millions and millions of people without PM, that have nothing since their retirement was based on paper pensions/investments are worth nothing, and really pissed off. The 1929 crash put us on the gold standard and enacted Glass Steagall, I believe.
Post disaster price discovery, does it exist, or is it government set? That is what I struggle with…
The BLS have shown in the past that they are willing to print whatever jobs figures the Fed needs.
In the past, that meant printing “good” figures so it appeared the Fed repressive policies were working.
Do we now believe that the BLS are rebelling?
Or is this latest jobs print still the news that the Fed needs?
After all, the Fed cannot raise rates. But they are under pressure to do so.
They need an excuse not to raise rates.
Et voila – a bad jobs report.
The Fed continues to tread the fine line between their policies seeming appropriate for the economic conditions, without actually producing any results.
If the Fed gets pressure to increase rates, the jobs report will be bad.
If they get criticism for failed policies, the jobs report will be good.
Back and forth we go, until the whole thing comes crashing down.
And at that point they will say “No-one could have seen this coming”
Maybe Lincoln was wrong- Maybe you CAN fool all of the people all of the time! Looks like we’ve got a group that’s gonna’ try it and see if anybody can (will) stop them.
As a non USA person (Holland, or should I say EU (sarc) here) I read your work to get a more real idea of the state of the USA economy as we get it broadcasted here and you do a very well job including what it all means. Thanks for this free service.
I know I cannot repay your business with business but I have to ask and hope u will reply. This metric shows up for quite a while on the BLS as you translate well into
”the only age category to have registered positive March job growth was 55+; i.e, senior citizens that can no longer afford retirement – and thus, take the low-paying, non-benefits accruing jobs”
To me that signals that elder, instead of yourger people that the older were usually replaced with in the past now have the better work ethics and skills needed. Scary for the future to say the least. I worry we get the same in my country since since my grandparents, when the USA sneezes Holland gets a cold…
Yes, no doubt a weaker ethic. Plus, the young are too busy running up taxpayer funded, undischargeable student loans to get worthless degrees, whilst living at home with mom and dad.