Stocks fall as jobs report adds to economic fears

Today’s labor report reveals a classic case of addition by subtraction through statistical massage. The positive job creation histogram and down tick in unemployment from 9.8% to 9.5%, viewed as favorable trends for some, arises from workers leaving the civilian labor at a faster than job destruction.

The stock market's reluctant to generate even a short covering rally despite consecutive down days suggests recognition that workers, likely being reclassified as long-term unemployed, are struggling to find jobs today. Statistical tricks used to massage the headline numbers only fool the fools.

Economic activity is either accelerating or decelerating. Economic deceleration can be ignored only so long. The sluggishness of the stock market suggests that legislators, more worried about self-preservation, could be frozen by the fear of losing their jobs in November through association of reckless spending. Playing catch up with fiscal and monetary policy is not only dangerous but also expensive. The long one waits the more stimuli and QE will be required when cries of save me outweigh the drive for self-preservation.

Job Creation Histogram (JCH): Net Nonfarm Payrolls Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average:

Reports on jobs in the past two days had diminished expectations for the snapshot of the labor market. Payroll company ADP said private employment was weaker than expected, while the government said initial claims for unemployment benefits rose unexpectedly last week.

Source: finance.yahoo.com

$600 Sale? Get Ready for Tax Form

Timing is not only important in the markets but also in lawmaking. As confidence fiat currency wanes, a secondary transitional system (black market currency) is certain to develop. The custodians of the failing system are certain to construct and enact laws intended to track and discourage in order to maintain control.

Passage by Congress of the national health care legislation has had an unintended consequence to the nation’s coin collectors, vest-pocket dealers who buy and sell coins, and larger dealers who are frequent buyers of coins that collectors periodically liquidate as they trade up their collections for better coins, or simply sell to take a small profit or loss.

What has happened is that effective Jan. 1, 2012, the whole system of giving and receiving Internal Revenue Service 1099 forms will be turned on its head and all persons (including corporations) who are in business will now have to give 1099 tax reporting forms for coins and other goods that they sell as well as buy.

Source: numismaster.com

CBO tells Obama deficit panel that forecast remains bleak

When debt can no longer serviced by internal (almost nonexistent) and external savings, it will be monetized.

In its latest long-term forecast, the nonpartisan Congressional Budget Office predicted that the national debt, which has surged to nearly 60 percent of annual economic output in the wake of the recession, would continue rising in the coming decades despite cost-containment measures in the health overhaul Obama signed this spring.

Source: washingtonpost.com

Mailbox

Go to this link and review the beneficiaries of Bailout Funds, especially those that are NOT banks or financial Institutions.

Source: bailout.propublica.org

Gold's Cup and Handle Formation

Thin trading, headlines promoting fear & doubt, and the increasing casino market mentality has augmented volatility in gold. Gold is a market driven largely by fear and greed towards the end.

The trend managers know the end result of a flagging economy will be more devaluation. As a result, short positions used to control must be reduced, preferably into weakness before the next round of stimulus and quantitative easing. The stock market is giving a very strong signal that cannot be ignored for long.

Devaluation, which is equivalent to the revaluation of gold, used to mitigate the excessive debt burden from the prior expansion is not deflationary. Hyperinflation, and the build up to it, is a product of dire economic conditions and the official currency response to it.

Paper Gold ETF (GLD):

Gold, Austerity and Deflation

"Gold got whacked 39 points to 1206 but still above 1200. Gold is looking at deflation. Be sure to read my explanation on tomorrow's site."

I hate to see gold associated with deflation in this manner. Gold is looking at deflation? No way, gold's whacking was nothing more than a paper operation that capitalized on a thin market looking for an excuse that could be parroted on F-TV. To link the gold's decline with deflation implies that the U.S. dollar provides a stable reference point despite unofficial neglect and constant devaluation since 1971.

We should be asking what's the political half-life of austerity intended to strengthen the currency when the economy is clearly weakening? Austerity and balanced budgets were adopted early on in the Great Depression. They worked so badly that Roosevelt, acting against the consent of the majority of economists, removed gold from circulation through Executive order in 1933 in order to devalue the dollar in 1934.

Promotion of austerity now will only accelerate the onset of another Great Depression.

Fear and Leverage

Nothing has changed but fear and leverage will make appear that it has.

When the black boxes, chasing strength and selling weakness, all try to squeeze through a tiny exit door, the chart (short-term technical analysis) quickly crumbles.

Click to Animate:


There's very good support at the 12/04/09 gap, but I doubt the black boxes are programmed to notice it.

Paper Gold: