The Dreaded D Word

From Zerohedge again:

One Sick Labor Market

There were so many disturbing elements to the May jobs data that we’re not sure we can do justice to the litany of disappointments (with some help from our friends at the Investor’s Business Daily):

  • The share of long-term unemployment is at its highest level since the Great Depression (42%).
  • Fully 54% of college degree graduates under the age of 25 are either unemployed or underemployed.
  • 45 million Americans are on food stamps — one in seven residents.
  • 47% of Americans are on some form of government assistance.
  • The employment-to-population ratio for 25-54 year olds is now 75.7%, lower than it was when the recession supposedly ended in June 2009.
  • The number of people not in the labour force has swelled eight million since the recession ended; absent that effect, the unemployment rate would be 12% right now (about the same as President Obama’s election chances would be).
  • The number of people confident enough to leave their jobs fell 11% in May
    for the second month in a row to 891k, the lowest since November 2010.
  • The ranks of the unemployed who have been looking fruitlessly for work for at least 27 weeks jumped 310k in May, the sharpest increase since May 2011.
  • The unemployment rate for males aged 16-19 is 27% and for males between 20 and 24 it is 13%. Draw your own conclusions from a social (in)stability standpoint.
  • One in seven Americans are either unemployed or underemployed.
  • Only one in six of the youth are working full-time and three-in-five are living with their folks or another relative (as per the NYT).
  • A mere 16% of the 2009-2011 graduating class has found full-time work, while 22% are working part-time. Even those hired from 2006-08, just 23% are working full-time.
  • According to a poll cited in the NYT, just 14% of high-school grads today believe they will have a more successful financial future than their parents Line of the day, as depressing as it is, comes from an 18-year old: “Thank God I had a buddy at Burger King who could help me out”. Fast-food has emerged as the fast-growing industry in a country once led by technology. Even tech now is fuelled more by companies that produce nifty consumer gadgets and feed our narcissistic needs than those who focus on improving the nation’s capital stock which is the ultimate trailblazer for productivity growth and durable gains in our standard-of-living.

Something to think about on a Wednesday afternoon dear readers.

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Economics: Ponzi Schemes & You

A few things before we get started:

  1. Lack of regular (and good) posting bothers me too. I’ve taken on a second day gig because it’s an opportunity that cannot be ignored. I guess I will sleep when I’m dead.
  2. Regular day gig is still in transition.
  3. Family outranks all of this.

So, I wanted to talk about this Zerohedge post from yesterday afternoon.

Here’s the summary:

Foreign, central banks are directly investing into US stocks with their reserves.

Now, under the Fed’s mandate, this in itself is not only unethical, but illegal based upon the explicit wording in it’s own charter. Not that it matters as the Fed has gone so far past it’s mandate at this point, that actually adhering to the rules set would be laughable. BTW, never throw out a complicated conspiracy when you can just chalk it up to shocking levels of incompetence.

Denninger covers it here as well.

Extend. Pretend.

There is no evidence that this trend will cease. Based on previous history, it is only a matter of time before this comes to an end. I stand behind the statement that at some point they will run out of places to blow these bubbles.

From the Zerohedge piece:

In other words, while the Fed’s charter forbids it from buying US equities outright, it certainly can promise that it will bail out such bosom friends as the Bank of Israel, the Swiss National Bank, and soon everyone else, if and when their investment in Apple should sour.

Luckily, this means that the exponential phase in risk is approaching as everyone will now scramble to frontrun central bank purchases no longer in bonds, but in stocks outright, leading to epic surges in everything risk related, then collapse and force the Fed to print tens of trillions to bail everyone out all over again, rinse repeat, until this chart becomes asymptotic. We say luckily, because it means that the long overdue systemic reset is finally approaching.

Do you see the trend/ What did the Dow close at yesterday? 12,900?

Harkening back to a discussion I had in 2005 with John Dvorak, I believe we have one hell of a ramp up, but when you start to approach 20,000, it’s time to run for the hills.

BTW, on another note, expect a run on ammo and guns sooner rather than later – meaning prior to the election. I’m starting to see incremental price increases based upon demand alone. My favorite vendors are running low on bulk, but doing ok on the premium stuff. If you are inclined to spend some cash on ammo stocks, I would advise that now is a good time.

I still think we have a long way to go. However, the darkness approaches, and at a steady pace. Keep your wits about you. Watch your six & keep your powder dry.

 

Agreed – Fair Warning from Denninger

I completely agree with Karl.

It is not often that one gets this sort of rotational warning in such a clear form, but you’re getting it now.  The same thing is true in the DOW, with IBM being the power mover there.

Beware folks.  Be very, very careful.

Though, my opinion is that we will see a run up to uncharted territory before the fall if crude doesn’t skyrocket over the summer. When you see the DJIA in the 19,000 to 22,000 range, it is literally time to head for the hills. The end result of that one will be five times what 2000 & 2008 were.