FedUpUSA

Archive for June 4th, 2010

Europe’s Core Is Burning, As Austria Next On The Implosion Radar; German, France CDS Blow Out

Submitted by Tyler Durden

Austria, the country most exposed to weakness in Central and Eastern Europe, is back on the radar. After having avoided skeptical investor scrutiny even as the bulk of Europe was collapsing all around it, the country is today’s top CDS widener, yet still stunningly trades inside of France and Belgium. Look for this spread to blow out over the next week. Then again, the biggest CDS wideners are precisely the countries formerly seen safe: Austria, France, Germany and Belgium are all the top movers in CDS. So much for the whole North vs South division in Europe.

Financial Jenga

This morning, the Bureau of Labor Statistics release triggered news report to put up a huge headline:

431,000 Jobs Added in May

That sound impressive on the surface but the reality is much less than it seems. When you dig down into the numbers you can see just just how little really is there. First, the Census Bureau hired 411,000 temporary workers who were counted as part of the 431,000. The BLS claims 41,000 private-sector jobs were created, with the discrepancy likely coming from net layoffs at state and local levels of government.

Let’s drill down a bit farther and take a look at the Birth-Death model that we have written about before. When we look there, note that the “model” has added 215,000 private-sector jobs for May. By backing out this estimate, we can conclude that the actual survey measured a net loss of 174,000 jobs in the real economy.

We can also dissect the Unemployment Rate in the same fashion. This statistic is based on the Household Survey, where the jobs created number is based on the Establishment Survey of employers. The Household Survey again shows that the number of people with jobs shrank in May – in this case the measured loss was 35,000 jobs. That is not as bad as the Establishment survey but still pointing in the wrong direction. The only way the BLS was able to report a lower unemployment rate was because they reduced the Labor Force by 322,000 workers, even while the pool of employable citizens rose by 170,000 people. Basically. BLS arbitrarily said 600,000 people ceased to exist for purposes of their calculations this month – so they could report a lower unemployment rate.

This is clearly a piece of propaganda designed to keep the ignorant public “confident” and spending despite reality. Like much else that comes from government, BLS reports have become riddled with accounting tricks that amount to fraud in order to paint a rosy picture. Don’t be taken in.

Non-Farm Payrolls 6/4: OUCH

Posted by Karl Denninger

“I told you so”

 Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. Private-sector employment changed little (+41,000).

So much for the “strong” (+200,000) private sector job growth that everyone was expecting.

The futures reaction was instantaneous and violent – southbound.

There has never been a so-called “V-shaped” recovery where we only managed to add 40,000 jobs.  Oh, and of that “+40,000″ about five times as many were fictional jobs created by the “birth-death” model in the establishment survey.  I ignore that survey in my tracking for the simple reason that the government can (and does) basically add whatever it wants to print in their “black box” and proves up nothing on it – nor does it expose its methodology.

Instead I use the household survey, and once again present my two “tracking graphs”:

The annualized number continues to show improvement but has failed to cross zero and the monthly change is barely positive.  Given that Census hiring has peaked and we will in the coming months see Census layoffs this is bad news.

What’s worse is here:

Eek.  After several months of improvement in the “not in labor force” number, showing that people were re-entering the labor force seeking jobs, this month showed new deterioration in that leading indicator of hiring.

That is, we once again have more people leaving the workforce despite May being one of the two months that typically record big gains in the labor force due to graduation of both High Schools and Colleges, and the “forward expectations” of “about to be new graduates” entering the workforce.

This is an insanely weak report all things considered, and is entirely out of character with the claim of a “V” shaped recovery, or alternatively, a claim that the “stock crash” in 2008 and 2009 was reflective not of weakness in the underlying economy but rather a “pure financial panic.”

This report ought to stuff a rag in the mouths of those who have been running that crap.  The fact of the matter is that there has been no meaningful turn in the employment situation and in the coming months you’re going to see those 400,000 Census Jobs go back into the ranks of the unemployed.

With policy capacity to intervene essentially exhausted it will soon become evident to the “talking heads” that all we did by refusing to admit to the insane amount of overcapacity in the economy and the outright fraud served up by our “financial institutions” was to blow somewhere north of $3 trillion attempting to reinflate a popped balloon, meaning that we no longer have effective policy tools to deal with the underlying rot that we refused to excise, and as such we are now consigned to live with the consequences – and they won’t be pretty.

Buckle up folks, the road ahead is quite rough.

In Summary:

410 Jobs attributable to the Census (which are temporary federal employment)
220 Jobs attributable to the Birth/Death Model
330 People Falling off the Rolls and No Longer Counted

Nearly 1 Million Fake Jobs

Back those out and the REAL number here is NEGATIVE.  226,000 JOBS LOST

 Expect to see headlines that scream:

443 Thousand New Jobs! Unemployment Drops to 9.7%

The government fraud continues to obfuscate truth and reality from the people.   Don’t be fooled.  You’re being lied to.