Mish's Global Economic Trend Analysis

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• Reader Question on Greenspan and Gold: "No Fiat Currency Can Match It"
• Crony Capitalism Tribute: Mafia Dons vs. Politicians; Who Really Won the Election?
• Nonfarm Payrolls +214K (Led by 52,000 Leisure Jobs); Unemployment 5.8%; Labor Force +416,000

Reader Question on Greenspan and Gold: "No Fiat Currency Can Match It" Posted: 07 Nov 2014 01:28 PM PST Reader Stephen is wondering about Greenspan's Stunning Admission: "Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It". It seems the Council on Foreign Affairs left out some key sentences in its transcript of A Conversation With Alan Greenspan. The conversation is between Alan Greenspan and Gillian Tett, U.S. Managing Editor, Financial Times. Missing Snip Tett: Do you think that gold is currently a good investment? Greenspan: Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it. Question From Reader Stephen Hello Mish I am a frequent reader and would like to know what you think about the Greenspan news. In particular, how is it that a former head of the Fed can make a statement that gold outshines the dollar and it is not headline news. Rather, his remarks to that effect are expunged from the transcript. Am I alone in thinking this is surreal? What's It all About? Let's step back a bit and ask what the conversation is really about. The transcript shows Greenspan still attempts to absolve himself of blame for the housing bubble and the great financial crisis. Contrary Indicator? Secondarily, one has to wonder about Greenspan's new-found liking for gold given that Greenspan was a contrary indicator for his entire career (For details see Maestro Memoirs). I had a conversation along these lines with Pater Tenebrarum at the Acting Man blog last week. Pater commented ... "You often find retired officials suddenly espousing stances that are quite different from those they supported in their time in office. I think about a year ago, Greenspan said something even more important, and very true: he mentioned that before there was a Fed, the US economy experienced the strongest growth in its history during the gold standard Gilded Age. I recall that the press reports on this were tinged with bemusement, mainly because most people know nothing about history, least of all economic history. They all think economic history started in 1929." Feeling Guilty? For all his faults, it appears Greenspan knows the score.  I suggest the man simply has a mighty guilty conscience. As for why none of this is big news ... Yes, it is a bit surreal. Then again, gold has been entirely written off by nearly everyone. Anti-gold sentiment is likely at an all-time high. The Council on Foreign Affairs may prefer to keep it that way, or perhaps there is some other explanation. They did include this snip. TETT: I imagine right now, it's because of a question mark hanging over the value of fiat currency, the credibility going forward. ... GREENSPAN: Well, that's what I'm getting at. Every time you get some really serious questions, the 50 percent of the gold price determination begins to move. ... TETT: Right. Well, I'm sure with comments like that, that will be turning you into a rock star amongst the gold bug community. In fact, you're probably trending on Twitter today. 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.

Crony Capitalism Tribute: Mafia Dons vs. Politicians; Who Really Won the Election? Posted: 07 Nov 2014 09:32 AM PST Who Really Won the Election? If you think Republicans won the recent mid-term election you are mistaken. PolicyMic has One Chart that Shows Who Won. Most Expensive Senate Races Money Won the Election! The Center for Responsive Politics projects the 2014 mid-term election will cost roughly $3.67 billion. When all is said and done, Team Red (all Republican candidates, parties, committees and conservative outside groups) will spend $1.75 billion on this election. Team Blue (all Democratic candidates, parties, committees and liberal outside groups) will spend a total of $1.64 billion. [Outside groups account for the rest.] Election Cost Estimate Just three-one-hundredths of one percent of Americans wrote a check larger than $2,600 — the maximum one individual can give to a candidate each election — during this cycle. But those are numbers based on the system of so-called "hard money" donations — money given to candidates or committees, which is strictly limited. Outside groups rarely deal in sums so small. Most outside groups rely heavily on large donors. Very large donors The number one donor of disclosed outside money is Steyer, followed by former New York City mayor Michael Bloomberg, who has given $20 million to super PACs, of which 98 percent went to liberal or Democratic recipients. But despite those top two donors, conservative donors dominate the top 20 — 15 of them are conservative. The three other liberal donors are: Fred Eychaner ($7.9 million), George Soros ($3.5 million) and hedge-funder James Simons (and his wife Marilyn), who have given $3 million. The top conservative donor to outside groups is Paul Singer, of hedge fund Elliott Management, who has given $9.3 million. Last cycle's top donor — both to outside groups and overall — was Sheldon Adelson, owner of the Venetian casino in Las Vegas, who with his physician wife Miriam gave $92 million. Topping the list of organizations contributing money to outside groups is the National Education Association, which has given a whopping $22.4 million to outside groups. Following the NEA are a slew of other labor unions — the Carpenters & Joiners Union ($11.2 million), the AFL-CIO ($7.6 million) and AFSCME ($6 million). These unions gave almost exclusively to liberal outside groups. There are, however, a handful of conservative organizations on the list of big organizational donors, including the No. 3 group, the National Association of Realtors, which gave to its own super PAC; it has spent the money in support of Republicans by a two-to-one margin. An important caveat: These lists of top donors (individuals or organizations) do not include donations made to dark money groups, which in some instances pass money on to super PACs. Finger-Pointing Each side can (and does) point the finger at the other. Regardless, the end results show incumbents get reelected year after year. Even in the 2014 mid-term rout, Republicans only picked up 12 House seats. Want to get elected? First you need to pass a litmus test for your party. Want to reform Social Security or Medicare? If you do, you better not say so. Next, you better not offend both unions and the NRA. Depending on where you live, one of those alone may do you in. Both and you are toast. Live in a state that gets military contracts? If so, you cannot get elected if you are "weak on defense". Bottom line: If you want to get elected, you better listen to what big money wants, or you don't get any of it. And you need money to win! Mafia Dons vs. Politicians Gordon Long has an interesting post this week called The Crony Tribute System. Instead of clipping text here are some self-explanatory graphics. Crony Tribute Mafia Tribute System US Political System Evolution of Crony Capitalism "Impenetrable" Firewall Between Public Service and Private Profit Why Does It Takes a Crowbar to Review Regulations? Investigating Fraud and Corruption Corporations are People, Money is Speech Checks and Balances Does It Matter Which Party Controls the Senate? I believe those graphics from Gordon Long sum things up quite nicely. If you believe differently, Charles Hugh Smith may change your mind with an excellent set of questions in his post If You Really Think It Matters Which Party Controls the Senate, Answer These Questions. Eight Questions Will U.S. foreign policy in the Mideast change from being an incoherent pastiche of endless war and Imperial meddling? Will basic civil liberties be returned to the citizenry? Will the predatory, parasitic policies of the Federal Reserve that virtually everyone from the Wall Street Journal to what little remains of the authentic Left understands has greatly increased income and wealth inequality be reined in? Will the steaming pile of profiteering, corruption, waste, fraud and ineptitude that is Sickcare in the U.S. be truly reformed so its costs drop by 50% to match what every other developed democracy spends per person on universal healthcare? Will the influence of Big Money be well and truly banned from politics? Will the incentives in the Status Quo be reset to punish rapacious financialization and gaming the system and reward productive investment and labor? Will anything be done to dismantle the Neofeudal Debt-Serfdom known as student loans? Will any prudent assessment be made of unaffordable weapons systems like the F-35 Lightning--$1.5 trillion and counting for aircraft that will soon be matched by drones that cost a fraction of the F-35's $200 million a piece price tag? Financial Repression I define financial repression as "a set of fiscal and monetary policies for the expressed benefit of the ruling class: politicians, banks, and the already wealthy, at the expense of everyone else." Any doubt that financial repression by central banks and lobbyist-sponsored government legislation explains income inequality? For further discussion, please see Gordon Long Video Interview of Mish: Topic - Financial Repression (and How to Defend Yourself From It). 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.

Nonfarm Payrolls +214K (Led by 52,000 Leisure Jobs); Unemployment 5.8%; Labor Force +416,000 Posted: 07 Nov 2014 08:24 AM PST Initial Reaction The payroll survey shows a net gain of 214,000 jobs vs. an expectation of 240,000 jobs. Last month was revised up from 248,000 to 256,000. The labor force rose by a solid 416,000. The unemployment rate fell by 0.1% on the basis of increased employment (+683,000) instead of the more typical reason that people dropped out of the labor force. Swings in employment and the labor force have been wild lately. All things considered, this was a pretty strong report. The one drawback is where the job gains came from. 52,000 of those jobs came in the leisure and hospitality category. Of them, 42,000 were in food and drinking services. These are typically low-pay if not minimum wage jobs. BLS Jobs Statistics at a Glance Nonfarm Payroll: +214,000 - Establishment Survey Employment: +683,000 - Household Survey Unemployment: -267,000 - Household Survey Involuntary Part-Time Work: -76,000 - Household Survey Voluntary Part-Time Work: +208,000 - Household Survey Baseline Unemployment Rate: -0.1 at 5.8% - Household Survey U-6 unemployment: -0.3 to 11.5% - Household Survey Civilian Non-institutional Population: +211,000 Civilian Labor Force: +416,000 - Household Survey Not in Labor Force: -206,000 - Household Survey Participation Rate: +0.1 at 62.8 - Household Survey October 2014 Employment Report Please consider the Bureau of Labor Statistics (BLS) October2014 Employment Report. Total nonfarm payroll employment rose by 214,000 in October, and the unemployment rate edged down to 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, retail trade, and health care. Click on Any Chart in this Report to See a Sharper Image Unemployment Rate - Seasonally Adjusted Nonfarm Employment January 2003 - October 2014 Nonfarm Employment Change from Previous Month by Job Type Hours and Wages Average weekly hours of all private employees rose by 0.1 hours to 34.6 hours. Last month I said the same thing, but a correction now puts last month at 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.4 hours. Average hourly earnings of production and non-supervisory private workers rose $0.04 to $20.70. Average hourly earnings of production and non-supervisory private service-providing employees also rose $0.04 to $20.49. For the second consecutive month, the prior month's hourly earnings (both figures) were revised lower by by $0.01. For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution? Birth Death Model Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back. Table 15 BLS Alternate Measures of Unemployment click on chart for sharper image Table A-15 is where one can find a better approximation of what the unemployment rate really is. Notice I said "better" approximation not to be confused with "good" approximation. The official unemployment rate is 5.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. U-6 is much higher at 11.5.0%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years. 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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