Archive for November, 2011
Nonfarm business sector labor productivity increased at a 2.3 percent annual rate during the third quarter of 2011, the U.S. Bureau of Labor Statistics reported today, with output and hours worked rising 3.2 percent and 0.8 percent, respectively. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2010 to the third quarter of 2011, output increased 2.4 percent as hours rose 1.4 percent, resulting in a 0.9 percent increase in productivity. (See tables A and 2.) Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
The productivity measures released today are based on more recent and more complete data than were available for the preliminary report issued November 3. (See Revised measures.)
Unit labor costs in nonfarm businesses fell 2.5 percent in the third quarter of 2011, reflecting the 2.3 percent increase in output per hour combined with a 0.2 percent decline in hourly compensation. Unit labor costs rose 0.4 percent over the last four quarters. (See tables A and 2.) BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.
This is deflation in the economic sense. That is, you produce much more with your labor and are paid slightly less — on balance you receive more per unit of labor output.
In this case you produced on a wage-hour adjusted basis, 2.3% more (annualized) than you used to. Note very carefully that this output improvement per-unit-of-labor-cost comes as a consequence of your efforts, and thus it belongs to you.
What this means to you, the common man, is that you should be seeing an approximately 2.3% deflation in prices overall. That is, the CPI, to be neutral on an economic balance basis, should be reflecting a 2.3% decrease in the cost of everything bought, because everything bought has to be made, and thus labor always is the source of economic output.
Well, how’s that been working out for you folks?
If you want to know why you have continually seen your standard of living destroyed over the last 30 years, here’s your answer in bright white-hot lights. Your productivity increase has been stolen by the banks and governments of the world — it is taken from you by compounded inflation!
Let’s assume a 2% productivity increase per year over 30 years. Let’s also assume a 2% inflation rate over 30 years. This is what it looks like, starting with a baseline of “10,000″:
Your cost of living has gone up by 78% in notional dollar terms but it should have gone down by 44%!
The spread between those two lines was literally stolen by the banks and government acting intentionally as a group. They defrauded you, stealing your economic output and improvement in productivity, using it to hide the impossibility of continual deficit spending. Summed, the line is flat — but it should not be; that improvement in standard of living belongs to you, not them.
This morning Obama’s lap-dog spewing spokesperson was on CNBC telling us that we must have higher taxes on “rich people.” This is just another sop to attempt to extend the ponzi scheme a bit further in an attempt to deflect attention from the above chart — the truth of how your wealth has been serially and intentionally stolen by taking from you that which is rightly yours — the natural mild deflation that comes from improvements that you generate through increased labor productivity.
That which you generate through your labor is your property and it has been stolen from you.
You’re being screwed by the politicians and banksters through an active and intentional series of confiscations of your labor engendered through manipulation of the nation’s currency, enabling trade, tax and government spending policies that cannot work in the long term. Over the last 30 years you should have seen your purchasing power increase by nearly 100%. Instead your purchasing power has been robbed from you through intentional inflationary policies, depriving you of the fruits of that productivity improvement.
Wake up America.
Tens Of Millions Of American Families Are Living On The Edge Of Desperation – And The Economy Is About To Get A Whole Lot Worse
Have you ever been so poor that you had to live in your car? Have you ever been so low on funds that the only place you could afford to live was a rat-infested motel? Have you ever spent a night living in a tent city or sleeping in the streets? If not, you should consider yourself to be very fortunate. As the recent Black Friday madness demonstrated, there are still lots of Americans that are doing well enough to go on wild shopping sprees, but the reality is that there are also millions of American families that are falling through the “safety net” to a place of total desperation. In a previous article I talked about the fact that the U.S. Census Bureau recently announced that a higher percentage of Americans is living in extreme poverty than has ever been measured before. Not only that, 2.6 million more Americans fell into poverty last year. That was also a new all-time record. As you read this, one out of every seven Americans is on food stamps and one our of every four U.S. children is on food stamps. Tens of millions of American families are living on the edge of desperation. In many communities across the United States, there is so much despair in the air that it is almost tangible. When you look into the eyes of many Americans these days, it almost seems as if all the hope has been sucked right out of their hearts. Economic despair is at epidemic levels, and unfortunately the economy is about to get a whole lot worse.
Did you see the report on families that are living in their cars that Scott Pelley did for 60 Minutes the other night?
If you have not seen it yet, I highly recommend that you take a few minutes to check it out.
At one school in Florida alone, Pelley met 15 children who had been living in their cars.
The following is a brief excerpt from Pelley’s report….
This is the home of the Metzger family. Arielle,15. Her brother Austin, 13. Their mother died when they were very young. Their dad, Tom, is a carpenter. And, he’s been looking for work ever since Florida’s construction industry collapsed. When foreclosure took their house, he bought the truck on Craigslist with his last thousand dollars. Tom’s a little camera shy – thought we ought to talk to the kids – and it didn’t take long to see why.
Pelley: How long have you been living in this truck?
Arielle Metzger: About five months.
Pelley: What’s that like?
Arielle Metzger: It’s an adventure.
Austin Metzger: That’s how we see it.
Pelley: When kids at school ask you where you live, what do you tell ‘em?
Austin Metzger: When they see the truck they ask me if I live in it, and when I hesitate they kinda realize. And they say they won’t tell anybody.
You can view the entire 60 Minutes report below….
Did you ever think that this would happen to America?
What makes things even sadder is that there are millions upon millions of empty homes right now in the United States.
Millions of American families have been foreclosed upon in recent years and home prices keep falling with no end in sight.
In fact, today it was reported that home prices are now the lowest that they have been in eight years.
So why aren’t people renting or buying more homes?
Well, the truth is that you can’t afford a mortgage payment or a rent payment if you don’t have a decent job.
When someone can’t find a good job, then none of the other economic statistics that many of us love to talk about so much really matter.
That is why I write about what is happening to American jobs so often. Today, big corporations are shipping as many jobs as they can out of the country. An average of 23 manufacturing facilities were shut down every single day in the United States last year. Even though our population is rapidly increasing, there are 10 percent fewer middle income jobs in the U.S. today than there were a decade ago. Until this trend gets reversed, the number of American families living in their vehicles is only going to increase.
Unfortunately, the U.S. economy is about to get even worse.
Today, it was announced that American Airlines has filed for bankruptcy. Sadly, there will be many more companies filing for bankruptcy during the upcoming economic downturn.
As I wrote about yesterday, we really are on the verge of a major league collapse of the financial system in Europe.
Jim Cramer of CNBC says that because of what is happening in Europe, the global financial system is at “DEFCON 3, two stages from a financial collapse that is so huge it’s hard to get your mind around.”
Unfortunately, Jim Cramer is not exaggerating. The global economy is heading for a massive amount of trouble if something dramatic is not done immediately.
This is not a drill. Bert Van Roosebeke, an economist with the Center for European Policy, recently made the following statement about the cold, hard reality now facing Europe….
“We’re actually really running out of money”
Back during the early 1930s, the flow of credit was greatly restricted and that was one of the primary causes of the Great Depression. Back in 2008, another massive credit crunch just about brought the financial world to its knees.
Well, now it is starting to happen again. A nightmarish credit crunch has already begun in Europe, and nobody seems to have any answers about how to stop it.
The following comes from an article in the New York Times….
From global airlines and shipping giants to small manufacturers, all kinds of companies are feeling the strain as European banks pull back on lending in an effort to hoard capital and shore up their balance sheets.
The result is a credit squeeze for companies from Berlin to Beijing, edging the world economy toward another slump.
When there is a credit crunch of this magnitude, it causes the money supply to start to shrink. This is already happening all over Europe as a recent article in the Telegraph noted….
All key measures of the money supply in the eurozone contracted in October with drastic falls across parts of southern Europe, raising the risk of severe recession over coming months.
Right now, we are seeing the money supply in each of the “PIIGS” nations fall at a staggering rate. The following comes from the same Telegraph article referenced above….
Simon Ward from Henderson Global Investors said “narrow” M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.
While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. “This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery,” said Mr Ward.
Those numbers are really, really bad.
But instead of doing something to prepare for the coming economic crisis, members of the U.S. Congress are focused on stripping even more of our liberties and freedoms away from us.
If this bill becomes a law, the United States of America would officially become part of the “battlefield” in the war on terror, and any American citizen could easily be flagged as a “potential terrorist”.
Once identified as a “potential terrorist”, the U.S. military would be able to arrest you, take you to a foreign prison and detain you for the rest of your life without ever having to charge you with anything.
What in the world is happening to America?
Unfortunately, as the economy gets even worse civil unrest in this country is going to intensify and the thin veneer of civilization that we all take for granted is going to start to disappear.
In response to the coming civil unrest, the U.S. Congress will try to pass laws that will be even more repressive than S. 1867.
Our nation has entered a downward spiral and things are going to become very frightening if this thing is not turned around.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.
These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.
As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant. At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise. These swap lines are authorized through February 1, 2013.
Uh huh. “Should market conditions warrant” eh?
How bad is the situation in Europe? This tells you: It sucks and is at least as bad, and possibly worse, than it was when Lehman blew up.
The announcement this morning sent the futures skyrocketing, up another 20 handles on the back of the previous 10ish that came from China announcing its own rate and reserve cuts. Chinese PMI is out tonight and you must assume it will suck as the central bank has the number up front.
From a market technical perspective this will gap us over the 50MA on the S&P; should it hold today then you have a very nice technical trade toward the end of the year while the eggnog buzz holds up.
This is a segment from tonight’s Freedom Watch with Judge Napolitano. In it he interviews Representative Justin Amash (R-MI), a man that FedUpUSA endorsed wholeheartedly in the 2010 elections. They discuss the Federal Reserve’s secret $7 Trillion bailout of the banks and the new bill being debated in Congress which would give power to the President to deploy our military against US citizens on US soil.
With regards to the banks, I believe I heard the ‘F’ word. Yes, yes, I did hear the ‘F’ word: FRAUD.
For those in the cheap seats: Fraud = Felony = Handcuffs and PRISON
Elect Someone To Help Justin Amash and Rand Paul
What you haven’t heard much of, but should have, is that there’s a second candidate for the House that shares Justin’s views. That’s Kerry Bentivolio.
We must take this nation back and restore The Rule of Law and The Constitution. They’re not just “good ideas” — they’re the supreme law of the land and the real path to prosperity.
This path is also achievable, if we all get involved.
But these positive changes and improvements in our nation will not happen on their own. They will not happen if you simply sit on your butt in front of the TV, or ignore the political process. Endemic corruption in Congress and business, intertwined and interlocked, will only end when we, the people,demand it.
The time is now and the opportunity emergent.
The choice is yours.
One of the points that I have repeatedly made in the blog is that we could solve a major part of our unemployment problem were we to fix the illegal immigration mess.
Well, Alabama passed a law effectively criminalizing working if you’re here illegally, and guess what happened?
Unemployment rates have fallen in Alabama amid new legal pressure on companies to comply with a popular immigration reform law.
September was the first full month that the reform was in force, and the unemployment rate fell from 9.8 percent in September to 9.3 percent in October, according to a Nov. 18 report from the state government.
The rates fell from 9.9 percent to 9 percent in Etowah County, from 8.8 percent to 8.1 percent in Marshall county, and from 11.6 percent to 10.6 percent in DeKalb county.
More to the point the unemployment rate fell in every county.
Nationally, the unemployment rate fell by 0.1% in October, while the decreases in Alabama as a whole was dramatically greater – five times greater.
Again: If you want to take a big bite out of our rampant unemployment problem stop coddling illegal invaders and instead prosecute both them and the employers of those illegal invaders so our citizens can have the jobs.
Aggregate consumer debt fell approximately $60 billion to $11.66 trillion in the third quarter of 2011 according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.”
The decline in outstanding consumer debt reveals that households continue to try and deleverage in the wake of a challenging economic environment and large declines in home values,” said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed. “However, our findings also provide evidence that consumer credit demand continues to increase, a positive sign for consumer sentiment.”
Even as “consumers” struggled to get out of debt while also facing a “challenging” economic environment—this is a euphemism for the the economy can’t suck enough—and large declines in home values, credit demand continues to increase according to the Fed, although aggregate debt fell by about $60 billion out a total of $11.66 trillion. That’s $60,000,000,000 out of a total if 11,660,000,000,000, which works out to about 0.5%.
I’ll leave it to you to work out the various contradictions in the Fed’s statement. Hint: is more debt the solution to a debt problem?
But more importantly, did “consumer” debt actually decline? Consider this stink bomb—
Aggregate consumer debt fell slightly in the third quarter. As of September 30, 2011, total consumer indebtedness was $11.66 trillion, a reduction of $60 billion (0.6%) below its (revised) June 30, 2011 level. The 2011Q2 and 2011Q3 totals reflect improvements in our measurement of student loan balances, which we had previously undercounted … As a result, student loan and total debt balances for 2011Q2 and 2011Q3 are not directly comparable to earlier data …
These balances are not directly comparable to earlier data? Oh, yes they are! The first graph below shows 2011Q2, which reflects “undercounted” student loan balances. The second graph shows the new data for 2011Q3, which incorporates those balances.
Using the new accounting, total household debt fell $6 billion relative to the 2nd quarter, the data for which has also been updated in Calculated Risk’s current (second) graph above. But if we compare 2011Q2 in the first chart with the 2011Q3 in the second, we see that total debt has increased by $266 billion when that new student loan data is included.
So the Fed has told us that total household debt decreased, which it did if you don’t take all the data into account, when in fact total household debt has increased. Do they think we’re stupid? I think they do. They certainly think we’re dumber than they are, and let’s face it, Fed economists are pretty thick. And the worst part of this is that nobody, not even Calculated Risk, noted the disparity. Everybody led with headlines like Bloomberg’s Household Debt Falls by 0.6% in Third Quarter. That article noted that there were “improvements” to the Fed’s student loan data.
In short, nobody gives a damn. Or didn’t bother to look at the previous data.
Here’s unorthodox economist Steve Keen talking about why we should forgive all this debt and start all over again. Keen’s views, which I have agreed with in the past, are not bullshit, although let’s face it, when all is said and done, Keen still an economist. That’s always troubling. You’ll note that the BBC interviewer Sarah Montague simply can’t wrap her mind around the idea of forgiving debt (aka. a debt jubilee). Her cognitive density, the impermeability of Sarah’s brain to unconventional thinking, becomes very annoying as the interview goes along.
You see, she has been taught that debt must always be paid back, even if it can’t be paid back, or else there is a moral hazard, although the same criteria apparently do not apply to those who issued the bad debt in the first place. Thus you will find that things really bog down in the middle of this long interview, as Sarah keeps asking the same question over and over again, and Keen struggles to answer it each time.