Friday, February 4, 2011

An Economy Going Down ("The Rise of the Men of the Double Standard" and the Women of None)

(If throwing a contribution Pottersville2's way won't break your budget in these difficult financial times, I really need it, and would wholeheartedly appreciate it. Anything you can afford will make a huge difference in this blog's lifetime.)

Please pardon the pidgen English - he's a financial whiz. This is diametrically opposed to the views of Paul Krugman, Dean Baker and other economists of note, and I'm publishing this so you can determine for yourselves which will work better for the masses in the long run.

A guaranteed hole By The Mogambo Guru The Gold Report interviewed John Williams of, who said, "I continue(d) to track M3, the Fed's broadest measure of the money supply until it ceased publication in March of 2006. Generally, the broader the measure of systemic liquidity, the better it serves as a predictor. In terms of giving a signal for the economy, you have to adjust the growth for inflation." I admit I was kind of dozing off by this time, daydreaming of the bacchanalian excesses made possible by gold and silver shooting up in price as a result of the insane increases in new money being created by the foul Federal Reserve. My reverie seemed so much more interesting than what I thought would be one of those academic exercises where smart people talk about things I don't understand because I am stupid, and probably wouldn't care about even if I wasn't so stupid. With a sudden start, I realized I was wrong! There is quite a lot of useful information in, "What's happened historically is that every time the year-to-year change in the inflation-adjusted M3 has turned negative, the economy has followed in a recession, or if already in a recession, the downturn has intensified." Now, there is nobody more attuned than I to the potential catastrophe inherent in something that has happened "every time", mostly about how I can tell you sad, sickening, sorrowful stories about money lost by betting on "what's happened historically", stories that will make you cry if you have any compassion or empathy, which I suspect you don't, and neither does anybody else, and you are all secretly happy that I lost money and suffered a loss, which is what I always suspected about all of you deceitful bastards. However, this is not about my raging paranoia or that I am a cynical old man who sees treachery everywhere, but that the M3 money supply has turned negative, inflation-adjusted, which is, as in "every time," significant! I was planning on calling Mr Williams on the phone to ask him, "Did you mean 'every time' literally, as in 'can't-miss guaranteed?'" But perhaps Mr Williams demonstrates real paranormal abilities by anticipating my call and replying - before I even asked! - that "Those signals don't come very frequently; but when they do, they are extremely reliable." Extremely reliable! That's the kind of market timing I am looking for, man! And if you are looking for something else that is "extremely reliable", I note that gold and silver have performed admirably for the last 4,500 years! Mr Williams' data points to an economy going down, even though I see the foul Federal Reserve creating $100 billion of new money per month so that the government can spend it, and it is all Very, Very Frightening (VVF) to those of us (me) who are (is) frightened (scared out of my freaking mind) by the prospect of catastrophic inflation in prices and economic collapse. This, in contrast to the seeming historical guarantee of gold and silver, makes it all so easy that you happily think to yourself, "Whee! This investing stuff is easy!" (Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.)

Meanwhile over at Coyote Prime, Neal Barofsky is being quoted about same (but you've gotta read just a little bit between the lines) and then a truly unexpected source of wisdom is quoted but it's only a small interesting part of a tirade about keeping gold and silver on hand instead of worthless pieces of paper (emphasis marks and some editing inserted - Ed.):

"(Special Inspector General - who was formerly head of the group charged with overseeing the government’s handling of the Troubled Asset Relief Program - TARP - Neil) Barofsky said that while the TARP program that Congress passed amounts to $700 billion, the total federal government support since 2007 for the economy and the financial sector could reach a far higher figure of $23.7 trillion. The government has committed significantly more money through a variety of other federal agencies and programs."

"Then you will see the rise of the men of the double standard - the men who live by force, yet count on those who live by trade to create the value of their looted money - the men who are the hitchhikers of virtue.

In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law (men who use force to seize the wealth of disarmed victims) - then money becomes its creators' avenger.

Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion- when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed."

- Ayn Rand, “Atlas Shrugged”

And if you thought Obama's State of the Union comments about spending what little money we have left to train our youth and the unemployed to be teachers, scientists and engineers were not particularly valid in times of outrageous numbers of the desperate-to-get-a-job unemployed who already possess these skills, as well as giving tax breaks to companies that continue to ship these remaining jobs out of the country to the lowest cost slave-labor suppliers, and/or firing the ones we've already got due to economic calamity brought on by banksters, you'll really enjoy what the Washington Post wants you to believe (and all the candidates who swear it's true). Read an explanation for this twisted dissection from the Center for Economic and Policy Research (CEPR) (emphasis marks and some editing inserted - Ed.):

Wednesday, 02 February 2011 The Washington Post had a major front page article highlighting the argument that the reason that the country has high unemployment is that workers don't have the skills needed for the jobs that are available. While it features comments from several employers, the only data that it presents to support this case is that the number of job openings reported by the Bureau of Labor Statistics is 900,000 higher than the low in the summer of 2009. The number of openings is still down by more than 1,000,000 from pre-recession levels. Furthermore, even if every last job opening were filled (an absurd situation, since there will always be some flux in the labor market), it would still leave almost 80 percent of the unemployed without jobs.

The anecdotal evidence from employers suggests that the problem is that people who run businesses don't understand basic economics. It presents comments from one employer who complains that he can't find workers for jobs that pay $15 an hour. This is not a very good wage. It would be difficult for someone to support themselves and their children on a job paying $15 an hour ($30,000 a year). If the company president understand economics, then he would raise wages enough so that the jobs were attractive to workers who have the necessary skills.

If the economy were actually suffering from a problem of structural unemployment, then we should be seeing substantial sectors of the economy, either by region or occupation, where wages are rising rapidly.

We don't see this. There is no major industry or occupational grouping where there is evidence of large pay increases. We should also see big increases in average weekly hours, as firms try to work their existing workforce harder due to the unavailability of additional workers. We don't see this either.

In other words, the data provide essentially zero support for the claim that the economy's problem is that workers don't have the right skills for the available jobs. All the evidence supports the idea that the problem is simply we have not generated enough demand (i.e., the problem is with the people who design economic policy, not with the country's workers).

Interestingly, in spite of the lack of evidence, we continue to see stories about how unemployment is structural. Rather than relying on evidence, these pieces invariably include anecdotes from employers who apparently don't understand that if you can't get the workers you need, then you must offer a higher wage.

Seems simple to most of us. So who benefits? How about the plethora of fake training academies who promise jobs somewhere in the future doing simple tasks like fixing computers or running large engineering and/or software organizations? And speaking of fakes . . .

Never forget that this woman was a candidate for the office of Vice President of the United States in 2008 (and may run again). And all the men you can thank. (And, no, this is only her head as Snopes says these cheesecake pictures are fakes.) And, yes, it's unfair to serious women candidates to characterize them wrongly (just as it is for men), but it seems to me that this is metaphorically true and one truth that they advertised again and again during the campaign as she was the candidate with a fantastic body and a big smile hiding a small mind - solely (and who can object to someone's head being placed on a great-looking body anyway?).

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