miercuri, 4 septembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

No Progress for Long-Term Unemployed; Ten Reasons the Problem is Structural

Posted: 04 Sep 2013 06:51 PM PDT

In Long-Term Jobless Left Out of the Recovery, the Wall Street Journal notes that Despite Improving Economy, Prospects Are Bleak for Millions of Unemployed.
More than four years after the recession officially ended, 11.5 million Americans are unemployed, many of them for years. Millions more have abandoned their job searches, hiding from the economic storm in school or turning to government programs for support. A growing body of economic research suggests that the longer they remain on the sidelines, the less likely they will be to work again; for many, it may already be too late.

The recession, for all its brutality, was comparatively egalitarian, said Gary Burtless, a Brookings Institution economist. It struck the young and old, educated and uneducated, white collar and blue collar. The recovery, by contrast, has been asymmetric: Those who held on to their jobs or quickly found new ones have made up much of the ground they lost, while the jobless continue to suffer.

"If you've made it through and you're still employed, your stock portfolio has recovered, your house price is recovering, too," Mr. Burtless said. "For the unemployed, this has been a miserable recovery compared to pretty much any of the postwar recoveries."

Recent studies in both the U.S. and overseas found employers often won't even consider the long-term jobless for openings.

Many have given up applying. Nearly seven million people say they want a job but aren't actively looking for work. The share of the population that is working or looking for work—a measure known as the participation rate—stands near a three-decade low. The rate was falling even before the recession, partly because of the aging of the baby-boom generation, but economists disagree about how much of the more recent decline is tied to the weak economy.

For economists, the key question is how many of the labor-force dropouts will return when the economy eventually rebounds more strongly.



At least some of those who have left the labor force are unlikely to return. More than 8.9 million Americans were receiving federal disability payments in August, 1.8 million more than when the recession began. Experts suspect many of the new recipients would have kept working in a healthier economy; research has found that once people begin receiving disability payments, relatively few return to work.

But other workers, especially those in their 20s and 30s, will almost certainly return.
What is Happening vs. Why

The Wall Street Journal did a good job explaining "what" is happening. The Journal failed to explore "why" this is happening.

I will address the key question in a moment. First consider a few more charts.

Those Not In The Labor Force Who Want A Job



Those who want a job but don't have a job total 6,619,000. That is an increase of about 2.2 million from the pre-recession low.

Factor the "marginally attached" (those who want a job and do not have one, but did not look) and the unemployment rate is 8.8%.

Marginally Attached Unemployment Rate - U5



Factor in "Involuntary Part-Time employment" (U6) and the rate is 14.0%

U6 Unemployment



Taking into consideration millions of additional part-time jobs created as a direct result of Obamacare lowering the number of hours part-timers worked even further, and the base unemployment rate as well as the U5 rate would both be higher. I suspect the U-5 rate would be between 9.5 and 10%.

Cyclical or Structural?

Regardless of what the unemployment rate is, here is the key question: Is the problem cyclical or structural?

The Fed thinks unemployment is a cyclical problem. I don't.

Ten Reasons the Problem is Structural

  1. The housing boom-bust is a once in a multi-generational phenomenon
  2. Demographics - The boomer boom has turned into the boomer bust
  3. Those graduating from college have unprecedented levels of student debt
  4. Fed policies bailed out the banks at the expense of everyone else (and now is payback time)
  5. The Fed holding rates low in conjunction with Obamacare costs has exacerbated the trend of businesses to seek new ways to eliminate employees in favor of hardware and software robots
  6. In general, Fed policies of holding interest rates low screwed those on fixed income, screwed the middle class, and screwed the poor, all for the benefit of the top 1% (and those policies are not likely to change)
  7. Housing formation by millennials is at a record low and because of student debt and a dearth of high-paying jobs is unlikely to change.
  8. Pension promises by cities, states, and counties cannot and will not be met. Several cities in California and Detroit Michigan are the tip of this iceberg.
  9. Slowdown in China, restructuring in Europe.
  10. Debt, Debt, Debt. A debt crisis is everywhere you look: Japan, Europe, India, China, US. Debt acts as a drag on the global economy unless it is expanding rapidly (and it cannot without creating still more problems)

It will takes years, if not a decade, to sort out those issues. In the meantime central bankers around the world further distort the global economy for the benefit of banks and those with first access to money.

Inflation Benefits Those With First Access to Money

For an explanation of how Fed policies benefit the banks and the top 1% at the expense of everyone else, please see Reader Asks Me to Prove "Inflation Benefits the Wealthy" (At the Expense of Everyone Else).

Wonderland Economics

Compounding the problem is a massive hoard of economic illiterates who promote inflation as the answer. For a case-in-point, please see DeLong-in-Wonderland.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

McCain Proposes Military Aid to Al Qaeda; Mideast Map of Who Supports Who

Posted: 04 Sep 2013 11:00 AM PDT

Inquiring minds are looking a Map of the Mideast that details who backs who in the Syrian Civil War.



Map of countries surrounding Syria (red) with military involvement.

  • Green: Countries that have given support to the rebels.
  • Blue: Countries that support the Syrian government
  • Yellow: Countries that have groups that support the rebels and other groups that support the Syrian government.
  • Sky Blue: Countries that have groups that support the Syrian Government.

This is pretty messy with factions in Iraq on both sides of the issue.

Who Gains From Using Chemical Weapons?

Assad had the most to lose by using chemical weapons. Saudi Arabia, Turkey, and Qatar have the most to gain, especially if chemical use was attributed to Syria (not the rebels).

As noted in Warmongers Unite (As They Always Do), Syrians In Ghouta Claim Saudi-Supplied Rebels Behind Chemical Attack. Here are some additional links.


John Kerry says US tests prove sarin used in Syria attacks

Kerry never answered the question "By Whom?"

Who Are The Rebels?

Just who are the rebels seeking to overthrow Assad?

Wikipedia has the answer in Foreign rebel fighters in the Syrian civil war
There have been a number of foreign fighters that have joined the Syrian civil war in opposition to Assad. While some are jihadists, others, such as Mahdi al-Harati, have joined to help the Syrian revolution.[59] Some fighters have come from as far away as Chechnya and Tajikistan.[60] Another group, the Al-Nusra Front, is headed by Abu Muhammad al-Julani[61] The group includes some of the rebellion's most battle-hardened and effective fighters. However, U.S. has formally designated the Al Nusra Front as a foreign terrorist organization. "Extremist groups like Jabhat al-Nusra are a problem, an obstacle to finding the political solution that Syria's going to need," said the American ambassador to Syria, Robert Ford.[62]

Al-Qaeda and affiliates are anti-Assad. American officials believe that Al-Qaeda in Iraq has conducted bomb attacks against government forces,[63] and al-Qaeda leader Ayman al-Zawahiri condemned Assad.[64] Several groups, such as the Abdullah Azzam Shaheed Brigade, al-Nusra Front and Fatah al-Islam[65] have stated that they conducted operations in Syria. Jihadist leaders and intelligence sources said foreign fighters had begun to enter Syria only in February 2012.[66] In May 2012, Syria's U.N. envoy Bashar Ja'afari declared that dozens of foreign fighters from Libya, Tunisia, Egypt, Britain, France and elsewhere had been captured or killed, and urged Saudi Arabia, Qatar and Turkey to stop "their sponsorship of the armed rebellion".[67] In June, it was reported that hundreds of foreign fighters, many linked to al-Qaeda, had gone to Syria to fight against Assad.[68] In July, Iraq's foreign minister again warned that members of al-Qaeda in Iraq were seeking refuge in Syria and moving there to fight.[69] When asked if the United States would arm the opposition, Hillary Clinton expressed fears that such weapons could fall into the hands of al-Qaeda or Hamas.[70] In October 2012, the United States expressed concern and confirmed that most of the weapons fall into the hands of radical Islamist rebels.[71]
McCain Says "Arm the Rebels"

Bloomberg reports McCain Balks on Syria Measure Absent More Rebel Support
McCain, opposing the resolution in its current form, will seek changes to include provisions for arming Syrian rebels and assurances that military strikes would be able to deter further Syrian use of chemical weapons, according to an aide who asked not to be named because he wasn't authorized to speak publicly.
Military Aid to Al Qaeda, Al Nusra

McCain wants to arm the rebels, but if we arm the rebels, we arm Al Qaeda, Al Nusra, and other  foreign terrorist organizations. It's as simple as that.

Warmongers like McCain do not care about such things. They just want war.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Warmongers Unite (As They Always Do); Boehner Caves In, Backs War; McCain Caught Playing iPhone Poker During Syria Hearing

Posted: 04 Sep 2013 12:20 AM PDT

In a completely expected yet disappointing moment, a wide range of Democrat and Republican fools have united in support of war.

It's hard to know precisely where to begin with this wrap-up as there is rampant stupidity on both sides of the political aisle but let's start with a preposterous statement by Secretary of State John Kerry who said Congress Faces 'Munich Moment'.
Secretary of State John Kerry told House Democrats during a Monday conference call that they face a "Munich moment" as they weigh whether to approve striking Syria to punish Syrian President Bashar Assad for using chemical weapons, two sources with knowledge of the call told NBC News.

The phrase is a reference to the 1938 Munich Pact that ceded control of part of Czechoslovakia to Nazi Germany -- a moment that history has harshly judged as an appeasement of Adolf Hitler that preceded World War II.
Kerry's Preposterous Comparison

Five Simple Facts

  1. Syria has no desire to rule the world
  2. Syria did not invade any other countries
  3. Syria is not demanding territory as the price for non-aggression
  4. This is nothing like the 1938 Munich Pact that ceded control of part of Czechoslovakia to Nazi Germany
  5. Kerry looks like a complete fool (as well as an Obama tool) to make the comparison he did

Rush to War

In this mad dash to war please note that John Kerry says US tests prove sarin used in Syria attacks
John Kerry, the US secretary of state, on Sunday strengthened the case for military action against Bashar al-Assad's regime after announcing that tests conducted on gas attacks in Syria had proved positive for the nerve agent sarin.

Sarin Used? By Whom?

Let's assume that sarin was used. Not once did Kerry say who was responsible. So who was responsible?

Please consider Syrians In Ghouta Claim Saudi-Supplied Rebels Behind Chemical Attack
As the machinery for a U.S.-led military intervention in Syria gathers pace following last week's chemical weapons attack, the U.S. and its allies may be targeting the wrong culprit.

Interviews with people in Damascus and Ghouta, a suburb of the Syrian capital, where the humanitarian agency Doctors Without Borders said at least 355 people had died last week from what it believed to be a neurotoxic agent, appear to indicate as much.

The U.S., Britain, and France as well as the Arab League have accused the regime of Syrian President Bashar al-Assad for carrying out the chemical weapons attack, which mainly targeted civilians. U.S. warships are stationed in the Mediterranean Sea to launch military strikes against Syria in punishment for carrying out a massive chemical weapons attack. The U.S. and others are not interested in examining any contrary evidence, with U.S Secretary of State John Kerry saying Monday that Assad's guilt was "a judgment … already clear to the world."

However, from numerous interviews with doctors, Ghouta residents, rebel fighters and their families, a different picture emerges. Many believe that certain rebels received chemical weapons via the Saudi intelligence chief, Prince Bandar bin Sultan, and were responsible for carrying out the dealing gas attack.

"My son came to me two weeks ago asking what I thought the weapons were that he had been asked to carry," said Abu Abdel-Moneim, the father of a rebel fighting to unseat Assad, who lives in Ghouta.

Abdel-Moneim said his son and 12 other rebels were killed inside of a tunnel used to store weapons provided by a Saudi militant, known as Abu Ayesha, who was leading a fighting battalion. The father described the weapons as having a "tube-like structure" while others were like a "huge gas bottle."

Ghouta townspeople said the rebels were using mosques and private houses to sleep while storing their weapons in tunnels.
Propaganda On Both Sides

Given the propaganda on both sides, it is arguable as to whether the above story is true or not. Regardless, the story is plausible.

More importantly, precisely what business is it of the US to rush to war over uncertain facts?

Is poison gas really any worse than tens of thousands killed in African slaughters by machetes and other means?

To those who died, what difference does it make?

The Difference Is Oil

The US is in Syria for two reasons.

  1. Oil
  2. Warmongers promote war on the flimsiest of excuses every chance they get

Were it not for oil, the warmongers probably would not have succeeded in this case. Oil is the only real difference between this case and numerous slaughters in Africa in which the US stood by and did nothing.


Boehner Caves In

As totally expected by any rational thinking person (especially in light of Boehner caving in to the whims of Obama on numerous budget issues) Boehner's Aboard: Obama Gains Syria-Strike Support
President Barack Obama gained ground Tuesday in his drive for congressional backing of a military strike against Syria, winning critical support from House Speaker John Boehner while key Senate Democrats and Republicans agreed to back a no-combat-troops-on-the-ground action in retaliation for a chemical weapons attack.
Warmonger McCain Leads the Charge

On September 2, McCain said Congress Must Support Obama on Syria Action

Republican Senator John McCain said Congress must back taking action against Syria and that a failure of lawmakers to act would be "catastrophic" for U.S. interests in the region.

Catastrophic? How? Why? Is Syria a threat to the US? If so, in what way?

McCain Caught Playing iPhone Poker During Syria Hearing

Syria is so much a threat that McCain Was Caught Playing iPhone Poker During Syria Hearing

As the hearing continues, our ace photographer Melina Mara reports she spotted Sen. John McCain (R-Ariz.) "passing the time by playing poker on his iPhone during the hearing."



Warmonger McCain attempted to make light of the issue with a ridiculous tweet: "Scandal! Caught playing iPhone game at 3+ hour Senate hearing - worst of all I lost!"

McCain Scandal

Yes senator, this is a scandal. If you were a Democrat, Fox news would be trumpeting the story for days if not weeks.

McCain learned nothing from his six years in captivity in one of the stupidest wars in history. And because of his captivity, he is the ideal spokesman for the defense industry warmongers.

Who better than McCain to fire the often heard charge "weak on defense"

McCain Fake Patriot

McCain is the gold medal winner in the "fake patriotism" contest.

Getting shot down in a war that the US should not have been involved with in the first place does not make one a hero.

Squandering taxpayer money in other senseless wars does not make one a hero either.

The simple facts of the matter are: this is another mad rush to war, on trumped-up evidence, for no good reason even IF the evidence as portrayed was correct.

Yet, here we go again, in another mad dash to war, this time with Obama siding with war-mongering McCain, and Boehner caving in to Obama (as he always does, on every issue).

Recall that Hillary Clinton caved in to Bush (and likely lost the nomination to Obama because she would not admit an error).

What if Romney Won?

Would things be any different if Mitt Romney won the election?

Given the Democrat strangle hold on the Senate, it is 100% certain that Obamacare would not have been repealed. Most legislation in Congress would not have been any different.

The biggest difference under Romney, is that we would probably be in a trade war with China and a real war with Iran. Would that be better?

If you conclude war was likely no matter who won, you conclude correctly. If you sense I am disgusted with both political parties, you sense correctly.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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