Unreal, it is just unreal, here we are 2.5 years into this recession and we are still seeing initial claims well over 450K a week, how? The pundits told us that employment had turned the corner months ago and we are in a strong “V” shaped recovery, but employment is a lagging indicator and should show real strength by March 2010. Well, it is half way through June and the only sector showing strong job growth is temporary government jobs, some recovery.
The 4 week moving average of initial claims is at 464,000 people, this is unbelievable and is not a good sign. To put this into perspective every month 1,856,000 are filing for initial jobless claim benefits, that is twice the amount of people that live in the entire state of Montana or two thirds of the population of Las Vegas, three times the amount of people that live in Boston Ma, you get the picture now? That is a lot of people. This is not a sign of job creation or job growth so it is beyond me how the President could have stood on that podium a couple weeks ago and proclaimed there is proof that the economy is getting stronger everyday when so many people are losing their jobs every day, not getting jobs.
I may be bearish and all, but this is beyond what I would call bad news and downright scary. People are not leaving their jobs for greener pastures, they are being laid off because business stinks. The proof was n the CPI which shows clear lack of pricing power or deflation dropped .2%, even taking out energy prices were only higher by .1% which shows zero pricing power except for iPads. What this means is the market is severely overvalued as it deserves to be trading at much lower price multiples based on deflationary pressures. We are not in 1930’s type deflation, but we are certainly heading in that direction, especially with Europe in turmoil right now.
To say there was any strength in today’s figures is simply lying to yourself and trying to spin bad news. I am sure the market will head higher because, well, the market sees no bad news until it is sitting on its chest, but it is clear as day that GDP is rolling over and employment is worsening, not improving. Would I short the market? Yes, but if you do not want to go short sell into rallies and buy bonds or stay in cash because when the market realizes it needs to compress P/E multiples we will move from 1,100 on the S&P to 900 in the blink of an eye. The market is not the discounting mechanism everyone tells you it is, just remember September of 2007 we hit all time highs when the crisis was hitting full steam, so higher stock prices is not indicative of a healthy economy.
One final thing, the parade of bulls on CNBC are long only mutual fund asset managers, where is their bread buttered, by having your assets in cash or in their funds? Think about that when listening to them dish out their “timely advice.”
I am not a fan of the current administration, I think most people know this by now and no I am not a racist or anti-government, but the action lately has just gone over the top of prudent governance. Joe Biden, at a fund raising event, said that the economy will be adding 500,000 jobs a month in the near future. Joe, whatever you are smoking, please pass it because you are feeling no pain and I could use that for a little while.
The notion that this economy will create 500K jobs a month in the “next few months” is absurd and irresponsible. How in the world will this happen? We are still seeing 450K+ a week in initial claims which shows that employers are still laying people off. The work week is still well below 40 hours, coming in at a little over 33 hours a week, and wages are starting to deflate. If this economy was going to create 500K jobs in the next few months we would not be seeing what we are seeing. I understand this administration is under tremendous pressure to boost employment, but there is a difference between giving people hope and flat out lying, Joe is doing the latter.
I suspect he made this statement because census hiring will kick into high gear for April and with the passage of the health care bill the government will begin hiring for the new agencies being created. However, those jobs are not “real” jobs, yes they pay people and they do work, but they are not private sector jobs which actually create products or services. Government jobs create nothing and are actually a drain on the citizens of the country as the salaries for these positions must be paid for by some type of tax or fee which sucks capital out of the economy.
Clearly Joe was being Joe when he made that statement because, as usual, it was reckless and inaccurate, like most of the things Mr. This is a Big F****** Deal says. I see a trend with this administration that is eerily like that of FDR’s administration, please read The Great Depression: A Diary by Benjamin Roth to see the similarities, which would not stand for criticism of any kind. I get many do not like the Tea Party because there are a few nut jobs in the crowd, as with any crowed, but look at what they are doing to them. They branded them anti-government, racist and dumb which is largely unfounded accusations and I seem to recall liberal rallies which were supported by the Democrats as citizens exercising their right to free speech. However, when the speech is criticizing the Democrats, well, they can’t have that now, can they?
Regardless, let’s take a look at another report about the health care bill. A new report from the Associated Press today says the bill will cost far more than what was projected by the CBO and by the Democrats, are you really surprised by this? The bill will cost $311B between 2010 – 2019 and, which the CBO already admitted, will raise premiums for everyone. However, there is way more cost than most people think about, let’s take a look at some back of the envelope costs.
The bill mandates that everyone has to have coverage or face a fine, but because of this mandate the government will offer generous subsidies up to individuals/couples making $88K a year. Who knows if these subsidies get bigger or smaller in the future, but we will use what we know for sure. The good news is that the poor will get “free” coverage and as your income increases so will the amount you will have to pay. The range of premiums owed is based on a sliding scale and will cost you between, assuming you make less than $88K, 3% – 9.5% of your income.
That is a heavy burden on a family even making $88K a year and for the kind of poor, making, say, $50K a year, you are taking a big chunk of a person’s income which they have no choice but to pay. On $50K a year they will end up paying about $1,500 a year for health insurance, $125/month, that is a lot of money considering the bi-weekly pay is about $1,200 for someone in that income range. This means that money will impact their standard of living perhaps preventing them from even owning a home. At the very least this bill will pull billions out of the economy every year, that is not what we need right now.
If we look at the 32M this bill will insure times the estimated about they will have to pay, the number gets pretty ugly. If we assume the average person will pay $3,500 a year in premiums, who much money will that take out of the economy? The answer, $112,000,000,000, almost 1% of the current GDP. If we look at the average subsidy you will receive, which the government, i.e. other taxpayers, will provide people, how much would that be? The answer, $288,000,000,000 (32M x $9,500 – average subsidy by my calculations based on current insurance premiums on an annual basis). I am not sure how Congress came up with the cost of this bill being only $930B or so, but I do not want whoever crunched those numbers to do my taxes.
The point I am making is that this bill which is being bragged about by the Democrats is not good for business and not good for the middle class. Let’s not forget that the real middle class, couple, will more than likely make more than $88K per year which means no subsidy at all for them. Paying for a $12K or $1,000 a month for a health insurance policy is a lot to ask. Most people do not realize that making $100K in today’s world is not that much money, after taxes, mortgage payments, property taxes, energy costs, kids and so forth.
The worst part is that the GAO has estimated that by 2020 93 cents on every dollar collected by the government through taxes will have to go towards entitlement programs. That means only a small portion will be available to go towards everything else we have, you know, like debt servicing costs. Does anyone think taxes on everyone are not going to go higher? I know, they promised that only the rich will pay higher taxes, news flash, politicians lie, shocking. If we do not have a VAT, value added tax, it will have to come from higher income taxes and, more than likely, we will end up with a VAT AND income taxes which would be horrible. I am not even going to go into the tax base they used to calculate this, but I will say it is absurd.
No one did not want to reform health care we just wanted it done right. I think people would have been for the stimulus if it was done right. The problem is that these programs were not done right and will cost us all dearly in the future. This is not about party lines, the Republicans stink as well, this is about the countries very survival. To put this into perspective, Obama just said I walked into a bad situation with trillion dollar deficits and $8T in national debt. Well, it is Obama’s second year in office and the national debt is now reaching $13T and somewhere along the way we are being told that 2 wrongs make a right, because bush did it first.
This is unsustainable and I mean any annual deficit is now unsustainable. Adding even $500B a year is irresponsible and will have catastrophic consequences let alone adding trillions more to this figure. People say we have to run deficits because we have trade deficits. What they don’t tell you is our trade deficits are not that big and we have enough debt outstanding that would cover our trade deficits for a very, very long time. I believe we are past the point of no return and freezing spending after increasing the budgets of government agencies by 20% is doing nothing to reduce our long-term debt obligations. Just like we are seeing in Greece now, this will all come to ahead very soon and who will bail us out?
In the meantime, if you actually believe we will have 500K a month job growth in the next few months while initial claims come in at 450K per week, pass me whatever you’re smoking.
When the 2008 elections rolled around Americans spoke loud and clear, they wanted change from the disastrous 8 years of the Bush administration. They wanted their freedoms back which meant the repeal of many of the Patriot Act, if you disagree you clearly have not read the Act, they wanted less power in the hands of corporate America and more power in the hands of America, they wanted affordable health care, they wanted bakers brought to justice, an end to the war in Iraq and Afghanistan, they wanted the economy brought back and, most importantly, they want to be heard again without fear of being locked away.
That is why Obama won the election. It was those based on those beliefs that conservatives, independents, liberals and a whole slew of in-betweens voted for him. Which the November 2008 Presidential election was a Electoral College landslide, surprisingly the popular vote was not, of course the media does not portray it that way and liberals forget that basics fact. Obama himself also went out on a limb and promised essentially the second coming of Christ in order to get elected and guaranteed many of the items mentioned above, but has not delivered on any of those promises.
Essentially, he is one smart politician, he gave Congress mandates, a Democratic Congress nonetheless, and those mandates ended up being very unpopular. So Congress put together packages, the stimulus, cap and trade, and every other piece of legislation this year and Obama merely supported it and twisted arms to get votes on it. However, he can now say, well I supported it, but I did not write it. I just gave Congress mandates to write key legislation and while these pieces of legislation weren’t ‘perfect’ they were better than doing nothing or something to that effect. Basically, he set it up so Congress will take the heat and he will look OK which is also why there are so many Czars as well so President Obama never has to actually make a decision, they are made for him by someone else and he approves them and can point the finger when they fail. Damn, I wish I had a system like that and we thought Bush was a puppet!
What I am saying is that Obama said we wanted to fundamentally change America and he is doing it, his way. Americans did not want a huge fundamental shift in what we did, we just wanted change for the status quo. We wanted a pre-9/11 America without having our head in the sand about national security, in my opinion that is the best way to sum it up. We know 9/11 happened, we do not need to be reminded of it every speech and we do not need terror alert upgrades every day, Fox News. Likewise, we do not need to here Obama speak every freaking day, he is not that good of a speaker, Bush even memorized his speeches, but oh no, Obama does the side-to-side head flop to the teleprompter pretending to look at the audience. I speak a lot at conferences and I find this insulting, if your going to read it just copy it and pass it out to everyone because I am sure all those in the audience can read, just like you.
The ‘fundamental change’ Obama was referring to was so far from what Americans had wanted it is showing in the polls already. He is the first President to dip below 50% by this time in his presidency since the polls started. Why? Because he has a Bush 2 complex of not listening, he knows better and damn the consequences. The people do not want a public option, President Obama says the people want a public option, huh? We want banks to not be backstopped by the taxpayer, i.e. 0% loans FRDIC guarantees, TARP, bonuses, etc. and I as you what has changed there? Nothing because banks give him a ton of coin for his campaign.
Cap and trade will double your utility bill, along with much higher state and local taxes I might add. Now, do I believe in global warming? Yes. Do I think man adds to it? Eh, a little, but not as much as you would think. What I do know is that in the middle ages the UK used to grow wine, better wine than France, so it was a lot warmer then than now, but hey, facts who needs them. Tax me to death and give out money to third world countries who already has US manufacturing jobs and are becoming larger polluters. Yup, makes sense to me. Nevertheless, our leader is off to Copenhagen to sell us out to the Europeans even though Americans are even more convinced, since Climate-gate, that global warming is a fraud and Congress wants to enrich Al Gore and Goldman Sachs with the ‘trade’ part of cap and trade. Oh, never mind that a British court found 9 factual inaccuracies with An Inconvenient Truth and the core of the Earth is millions of degrees, yes Al said that and he is the spokesperson for global warming.
At this point I am not sure what exactly the ‘fundamental change’ really was supposed to be. In all fairness to all the Obama voters out there, he never really told anyone what the change was, just kept saying change this and that. From my prospective the change seems to be that government can solve all of our problems, but it cannot and never has been able to. Government jobs programs always fail because they are filled with fraud and government jobs only take from the private sector while creating no value. A job is not just a job when the government employs you since the funding for that job comes from one of 2 places, taxes or debt sales. If there are not enough private jobs to tax then the government has to raise the money through debt auctions, either way government jobs are a destroyer of wealth, not a creator of wealth.
However, explain that to Obama or the Democratic Congress is a fruitless effort because they do not understand how the world works. Apparently they think that raising taxes and more debt is always the answer, but the same can be said about Republicans as well. It is humorous to see Republicans complain about the raising the debt ceiling now when they raised it 7 times under Bush. It is also funny to see Democrats who complained about the debt under Bush mute on the issue now and merely say, you are complaining about the debt now, where were you over the past 8 years? Umm, I was right here folks. Granted, I was more afraid then of being hauled off in the middle of the night than I am now, but nevertheless I hated the debt then and I hate it now, not to mention the annual deficits went from $400B to well over $1T in the blink of an eye. These problems were also not inherited, I remind you again that the Democrats had control of Congress from 2006 to the present, well before the crisis hit home.
I do watch Glenn Beck, he is funny, but brings up some great points. No worries, I balance it out with Rachel Maddow at night to keep my head from exploding. I stay away from Olberman and Hannity because those two are complete and utter morons, who are blinded by pure partisan politics and, if the money was right, would change sides in a heartbeat, don’t kid yourself about that. Frankly, anyone who votes down party lines like that is a complete moron anyhow, in my opinion, and are of little use to society because no one party ever has all the good ideas.
Regardless, Obama and his ‘fundamental change’ is just getting on its way and the further it gets the less popular it is with the people. This is for a good reason, it is destructive to America and what made us great for the last 60 years. That is what we need to remember, the US has only been a super power for 60 years, that is it. The only reason we maintained our advantage as a superpower is because we had the economic might to outspend the world on military innovation over that same time period, that to will be over very soon. Our debt load is crippling and within 10 years, at the projected rate and robust growth, the debt servicing costs will be so great that we will not be able to spend money on anything else besides our debt.
In other words, Obama’s ‘fundamental change’ is fundamental change to a new America, an America we will not recognize. I have no idea what it will look like, but based on the current projections, it is not good. He knows this, but continues down these paths anyhow and I have no idea why. The stimulus failed, even Jim Cramer said it failed as CEO’s saw none of that money. In fact on today’s Meet The Press Michigan’s Governor could only brag about Obama’s willingness to own the automaker’s as the reason for the states very survival. She went on to say that workers need to learn new skills and bragged about 1, yes 1, former auto parts maker who transformed itself into a wind turbine manufacturer instead of a car parts maker, I know the company and it employ’s less than 100 people. These are the crowning achievements of a fundamentally transformed America.
Even the Jobs Summit was a joke, if Bush pulled such a summit the media would have crucified him and them buried him alive, rightfully so. He invited labor unions to this thing, but not the chamber of commerce? What is wrong with this guy? Labor unions drain capital from healthy companies, look at the automakers for a perfect example of what unions do to companies. His next objective is to create more green jobs, great. More jobs for products that are so expensive the vast majority of the world’s population cannot afford them, way to go, and let me guess, this will be funded by TARP. Oh, wait TARP is going to be used to “reduce the deficit faster than we thought.” Seriously, he said this, “faster than we thought” which means the annual deficit would be neutral sometime before 2020, wow, nice job. How about we just stop spending what we don’t have? I know, I am silly.
I can’t help to think that this ‘fundamental change’ Obama was talking about is a move towards some sort of socialism. I know that is an unfair statement to make and a rather harsh or inaccurate one, but the facts are the facts. When we have labor become the predominant force in politics that is a move towards socialism, but I am not saying we are going to become a total socialist state, a quasi-socialist state yes. From my view point Federal employees should not be unionized and they should not be making $170K a year for sure, but they are. If we are not moving in this direction then what would you call it?
America is losing itself, this is a trend I noticed over the past decade and I attribute it to the dumbing down of Americans in general. We went hard right under Bush, a bad move, and now we are going hard left under Obama, a worse move given our financial health. What happens after Obama is out of office will be key, but I can assure you of one thing, it will be a drastic move because that is how America moves now, from extreme to extreme. It is perhaps the most dangerous time in America’s history and there are parallels throughout history of such extremes happening in politics. They all end badly for the population.
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