As I gathered material for this post, I came across an article that summed up my sentiments quite succinctly:
For all the endless talk of a recovery during the past five years, there is a very tangible reason why for most people this is nothing but spin, propaganda and lies: when one strips away the retroactively adjusted GDP, the seasonally adjusted (and politically mandated) counting of temp jobs, the constantly upward revised jobless claims, the Fed’s $4+ trillion balance sheet of course, and even the declining (yes, declining) real disposable income per capita, what one is left with is the lowest loan creation out of a recession (or depression) in history, and is at indexed levels last seen during the Lehman collapse over five years ago!
Why is loan creation important? Because in traditional economics (not their “New Normal” equivalent, where central planning decides everything), loans – i.e., money created by commercial banks – ultimately leads to GDP growth. It also has a direct bearing on the steepness of the bond curve and thus, inflation expectations. Conversely, the lack of loan creation ultimately means the government is forced to adjust the definition of GDP to make it seem as if there is growth, or to rely on an inventory stockpiling boost to “growth” and all other recently seen gimmicks to force the conviction of “growth.”
• source: zerohedge.com
Since 2008 there has been quite an awakening to the truths behind the economic downturn, banking and real estate crisis, the long-rooted causes and what we can expect looking forward.
Although I am sure that more people than ever are waking up, I can only assume that most people are indeed still apathetic. No one really cares to hear about and/or face the harsh realities of our situation but would rather just coast along on the illusion that they are spoon fed by the mainstream corporate media that all is well. Unless they have been personally affected why should they care?
Slight of Hand
First off, for the ultra-gullible, we have simply the stock market indexes. The most apathetic simpleton can merely look at the all-time highs that they have been reaching lately and go back to sleep watching football and reality TV believing all is well. For those of us who are actually paying attention, we know that the zero-interest money created out of thin air by the Fed, pumped into the banks and hedge funds has nowhere else to go but to inflate asset prices. Unfortunately, all bubbles eventually pop.
Smoke & Mirrors
The government statistics that are presented to the public to portray an economic recovery are manipulated and contrived hogwash. “Smoke & Mirrors” is the candy-coated version of “Lies & Deception”. When all else fails- they just change the rules. (or methods of calculation)
The Employment Situation
Another important statistical data point in the great deception is the “official” unemployment number.
Anyone who remotely understands what has been going on for the past 5 years knows that the main reason for the drop in the “official” unemployment rate has been a reduction in the actual Labor Force Participation Rate. In essence, as people’s unemployment compensation runs out or they take part-time jobs (for as little as one hour per week) they are simply not counted as “unemployed” any longer.
So despite a continually growing population and pool of persons of working age the Labor Participation rate is at a 30 year low.
…the total number of people outside the labor force to a record 90.5 million Americans.
And what is even worse, the Labor Force Participation Rate declined from 63.4% to 63.2%: the is the lowest print since August 1978!
• source: zerohedge.com
Initial Claims Worst In 9 Months; Holiday Volatility Blamed For Surge…
Initial claims rose 10k to 379k – dramatically worse than the 336k expectation – and the worst since March. Total benefit rolls also rose to 3 month highs, up 94k to 2.88 million. The piece de resistance – non-seasonally-adjusted initial claims were down 48.2k (against the seasonally-adjusted 10k), yet both are up exactly 13k from a year ago….
Lastly, 1,374,031 American on Emergency Unemployment Compensation (ie. extended benefits) – which are about to run out thanks to Congress…
which will implicitly send the unemployment rate plunging….
With even the Fed somewhat challenging the credibility of the official unemployment rate – as labor force participation collapses structurally – the possibility that if Congress does not act by Dec 28th, a further 1.3 million people will lose emergency aid and may be deemed ‘out’ of the labor force merely exaggerates an already farcical situation.
• source: zerohedge.com
On December 28 approximately 1.3 million people will have their extended unemployment compensation benefits expire/NOT extended further. That means that those people will no longer be counted as “unemployed”. The result of this statistical tap-dance will cause the official unemployment rate to drop by some estimates about .8%. The result will be a headline announcement that the ” Unemployment Rate” is now 6.5% or possibly even as absurdly low as 6.2%. And sadly, most asleep-at-the-wheel Americans will buy it as an improvement in the employment situation.
And we know even those official figures are skewed. As mentioned in previous posts, in 1994 the formula to arrive at the official number was changed. No longer are long-term unemployed counted let alone those working part time rather than full time. Again, if we still calculated the figure the same way the unemployment rate would be well over 20%. WHO WOULD STAND FOR THAT?!
For the Unemployed, A Big Cut in Benefits
Since 2008, the federal government has funded extra weeks of benefits, with the number of weeks dependent on the employment condition in each state. Laid off people receiving benefits in Pennsylvania, New Jersey and Delaware have been receiving an extra 37 weeks of federal benefits, for a total of 63 weeks.
The 37 weeks of benefits are ending as of Dec. 28.
The 1.3 million losing benefits include 86,900 in Pennsylvania, 90,300 in New Jersey and 3,700 in Delaware. These are people who have already received their 26 weeks of state benefits and are in the middle of receiving the 37 extra weeks.
Also affected will be those who are newly laid off or about to be laid off – an additional 262,500 in Pennsylvania, 260,100 in New Jersey and 13,800 in Delaware would be impacted in 2014, according to an analysis of U.S. Labor Department statistics by Pew Charitable Trust’s news service.
For example, the 800 to 1,000 people who will lose their jobs when Lockheed Martin shuts its plant in Newtown next year will receive 26 weeks of benefits, not 63.
The same situation awaits 244 people who serviced mortgages and were employed by Ocwen Financial Corp. in Fort Washington. They received pink slips Dec. 3. Also affected will be 500 at Merck & Co. in West Point, where layoffs began Monday and will continue until Jan. 5.
In November, nearly 4.1 million people, or 37 percent of the 10.9 million unemployed, were out of work for more than 27 weeks. The average length of unemployment, according to the U.S. Labor Department, is 37 weeks.
• source: Philly.com
Illusion of Productivity
Similarly, as noted in previous posts, due to the continual decline in GDP figures the government saw fit to reconfigure the calculation formula for that statistic as well. So, as of a couple months back the announced number does not ring as putridly as it would normally.
As of late, when those talking head blowhards on mainstream financial networks throw around GDP and GDP forecasts, they never mention a disclaimer regarding the new calculation method.
Also as absurd is the government’s official CPI numbers. The Consumer Price Index which is commonly used as a gauge of inflation, but more accurately consumer prices or cost-of-living expenses does not truly reflect the intention of its purpose. Since cost of living increases to SS payouts and the like are tied to this number it tends to skew lower than reality. For example, it does not include food & energy although they happen to be two of the most important expenses shouldered by common folk.
On the other hand, now included in the skewed GDP figures are healthcare costs and energy expenses that contribute to a higher headline figure. Complete and utter Smoke & Mirror grading systems.
The BLS reported the CPI yesterday morning. They tell me that inflation is well contained and has only risen by 1.2% in the past twelve months.
Over the proceeding decades, the BLS has sliced and diced the CPI in such a way that they can make it say whatever TPTB want it to say.
CPI was supposed to measure a common basket of goods and services that Americans needed to purchase in order to live their lives.
Even the composition of the index doesn’t match the true cost picture for the average American.
Being a skeptical sort, I decided to verify the accuracy of the CPI propaganda issued by the Bureau of Lies and Scams. The combination of the internet and memories from my youth provide a powerful and accurate assessment about the truthfulness of our government. I decided to create a chart of goods and services that average Americans have spent their hard earned wages on for decades. In a matter of minutes I was able to obtain prices from 1971 for various items common to most people.
This is one chart you’ll want to check out….
Category 1971 2013 % Change Average Price of New Car $3,470 $31,252 800.6% Average Price of New Home $26,000 $245,800 845.4% Gallon of Gasoline $0.36 $3.50 872.2% Natural Gas $0.35 $4.00 1042.9% Loaf of Bread $0.20 $2.20 1000.0% Sirloin Steak per pound $1.19 $7.00 488.2% Dozen Eggs $0.25 $1.90 660.0% Box of cereal 12 oz $0.36 $3.50 872.2% Pack of Cigarettes $0.32 $6.00 1775.0% College Tuition – Private $1,832 $30,094 1542.7% Monthly Rent $150 $1,073 615.3% Baseball ticket – Phila $2 $23 1050.0% Movie ticket $1.50 $9.00 500.0% Maximum Social Security Tax $406 $8,950 2104.4% Median Household Income $9,028 $51,017 465.1% Median wage per worker $6,497 $27,519 323.6% Average Hourly Earnings $3.60 $20.31 464.2% CPI 40.5 232.0 472.8% Consumer Credit Outstanding (tril.) $0.14 $3.07 2092.9% Mortgage Debt Outstanding (tril.) $0.51 $13.18 2484.3%
There are those who would blame the people who have chosen to live far beyond their means. They have a point. The American people certainly haven’t shown a penchant for delayed gratification, saving for the future, or consuming less than they produce. But it takes two to tango and the lead in this dance of debt has been and continues to be the Federal Reserve and their Wall Street bank owners. It’s always reasonable to ask – Who benefits? – when trying to figure out why something has happened over time. Did the American people benefit by increasing the debt owed to Wall Street banks from $650 billion in 1971 to $16.25 trillion today? I don’t think so, based upon the visible deterioration I am witnessing in my suburban paradise.
The financialization of America; where Wall Street con artists, shysters and swindlers rake in billions for shuffling paper and making risky casino bets; mega-corporations ship blue collar middle class jobs to Asia in an all out effort to increase quarterly profits; politicians spend future generations into the poor house in order to get re-elected; and the Federal Reserve purposefully creates monetary inflation to prop up the corrupt system; has systematically destroyed the working middle class and created generations of debt slaves. The American people have been foolish, infantile, and easily duped.
• read more: zerohedge.com
Colossal Fraud-There are No Free Markets
In the following interview with Greg Hunter of USAWatchgog.com, Rob Kirby of Kirby Analytics (with 15 years experience in trading derivatives) says these complicated derivatives overseen by the U.S. Treasury control the price of virtually everything. Kirby contends, “I refer to this as a price control grid. They are able to dictate and arbitrarily set the price of all strategic goods in the market, whether it’s capital, whether it’s energy or whether it’s precious metals.”
“There is colossal fraud and price control going on. There are no free markets.”
“We have 10-year U.S. bond rates under 3%, and I would say the United States is actually insolvent, and we have countries like Greece where 10-year bonds are yielding over 9%.”
The full interview can be heard at USAWatchdog.com
The last few minutes are quite sobering. For the summation/wrap-up got to @ 17:00 mins…
..…”You really need to direct the questions to the leadership of America……..These are the same people that when asked under oath if they were spying on American citizens, they said NO. These are the same people that said when you raise the debt limit of the United States, you’re not increasing the debt. These are the people that said affordable healthcare would mean that your premiums would not rise and you would be able to keep your existing coverage and you’d be able to keep your existing doctor, PERIOD!…..
Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World
Among other things, the month of November was memorable because for the first time, Caterpillar posted declining retail sales in every region around the globe.
Mortgage Applications Down 66% From Highs To New 13-Year Low
From its peak in October 2012, mortgage applications have collapsed 66% and this week printed at new 13-year lows. Since rates started to crack on Taper talk in May 2013, mortgage applications have fallen in a one-way street. Adding further salt to the wound of wealth generation, the refi index has dropped to a fresh 5-year low as the home equity ATM remains shut (having dropped 73% in the last few months).
• source: zerohedge.com
Existing Home Sales Tumble, Post First Annual Decline In 29 Months On Day After Taper Begins
Of course, as a reminder only 40% of house buyers actually use a mortgage, and the remaining 60%, as Goldman estimated recently, are all cash. Which means that not only are the all cash buyers fading out of the housing market at an ever faster pace, but if left only to the mortgaged-buyers, then watch out below.
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[…] originally posted this interview a few posts back buried deep in a post entitled: The Real Numbers Behind America’s Phony Recovery Illusion but this interview is so sobering that it really deserves it’s own dedicated […]