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A few years ago we were lucky enough to live about 90-minutes away from Yosemite National Park, now we’re even closer to Yellowstone which makes for a pleasant diversion now and then, that is, as long as gas doesn’t cost $4 or $5 a gallon (something that seems quite unlikely this summer). Here’s what we saw a few hours ago.
Give it a click for a ginormous image (and turn up your screen brightness).
In his weekly commentary, John Hussman explains why the stock market isn’t responding so well to Friday’s labor market report and wonders why anyone is surprised.
As I observed a few months ago in Notes on a Difficult Employment Outlook “Presently, the 4-week moving average of initial claims for unemployment is running at 468,500. This level is normally consistent with monthly payroll job losses on the order of 80,000. Against that, however, we are likely to get significant short-term job growth from census hiring, which can be expected to exert a positive impact on non-farm payrolls through mid-year. I continue to view the 4-week average of initial claims as one of the more informative series to monitor regarding the employment situation.”
A 4-week average of about 400,000 – 425,000 jobless claims is roughly where we would expect to observe flat jobs growth (excluding temporary factors like census hiring). With the recent figures running closer to 450,000, the fact that we got a positive private sector number at all was something of a gift. As the stock market sold lower on the news, it was fascinating to hear several analysts saying palliatives to the effect of, “Well, some amount of month-to-month variation should be expected. Nobody expected the economy to have a ‘V’ shaped recovery.”
Excuse me, but that’s precisely what the market has priced in. And that’s the problem.
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The fundamental problem is that we have not, as a global economy, accepted the word “restructuring” into our dialogue. Instead, we have allowed our policy makers to borrow and print extraordinarily large band-aids to temporarily cover an open wound that will not heal until we close the gap. That gap is the difference between the face value of debt securities and the actual cash flows available to service them. The way to close the gap is to restructure the debt. This will require those who made the bad loans to accept the associated losses.
I don’t know about you, but, whenever I hear anyone talk about how stocks are cheap based on forward earnings projections, my brain just automatically filters that out now.
Boy, there’s really been a lot of bad news for job seekers lately. After Friday’s labor report where the vast majority of new jobs were for temporary Census work, revelations that some employers won’t even talk to you if you don’t already have a job, and, if you can get a job, the prospect that you’ll get low-balled on your salary because your new boss thinks you should be happy to take whatever it is you can get, maybe it’s time to get really creative.
From the Nate Beeler archive at the Washington Examiner.
It’s funny how Congressman Ron Paul (R-TX) has been saying the same thing for years and years, but, only after a financial market crisis do people stop to listen (though, that doesn’t mean that anything is going to change anytime soon). There’s nothing new here in his weekly column about why governments hate sound money, but, somehow, it sounds new.
Time and again it has been proven that the Keynesian system of big government and fiat paper money are abject failures in the long run. However, the nature of government is to ignore reality when there is an avenue that allows growth in power and control. Thus, most politicians and economists will ignore the long-term damage of Keynesianism in the early stage of a bubble when there is the illusion of prosperity, suggesting that the basic laws of economics had been repealed.
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It is fairly typical in the midst of economic crises like these for gold to come under attack from Keynesians economists and their amen corner in the media. The arguments against gold are usually straw men, based on a fundamental misunderstanding of the purpose of buying gold. Gold is not a typical investment. It is a defense against the predictable behavior of governments to debase a fiat currency under its absolute control. The people who run the printing presses have trouble shutting them off. In order to limit one’s exposure to this reckless behavior, it is wise to exchange unsound assets for sound ones.
As the foundation of their power, their fiat currency, is rejected or avoided, government power is compromised. Fiat currencies trade the people’s freedom and security for the government’s freedom to squander the wealth of the nation on wasteful pet programs, wars, and corruption. This is why the freedom of the people is so intertwined with a sound monetary unit. This is also why the founders liked gold and silver, and supporters of big government hate them.
Of course, today’s cream-of-the-crop economists likely scoff at anything Ron Paul has to say, somehow still secure in the idea that what they wrote about in their doctoral thesis continues to make sense here in 2010, despite growing evidence to the contrary.
Bloomberg’s Caroline Baum talks to Bloomberg’s Lori Rothman about the vanishing plunge Protection Team and a host of other topics for the conspiracy-minded, all covered in yesterday’s column Goldman Sachs May Explain PPT’s Vanishing Act.
It’s always at least a little surprising when you see and/or hear someone speak for the first time after reading their writing for years. As regular readers know, Caroline’s columns have been linked to and featured here regularly for some time – this was a very pleasant surprise.
TOP STORIES
What Is Goldman Hiding? – NY Times
Out with Keynes, in with Hoover? – BBC
Goldman Subpoenaed, FCIC Says Firm Slowed Probe – Bloomberg
Germany targets $97.6 billion in budget cuts through 2014 – MarketWatch
Countrywide customers to be repaid $108 million for overcharges – LA Times
White House is directing agencies to cut budgets – Washington Post
We Need Bigger Deficits Now! – Delong, GRWBH
Overcoming the Debt Trap – Baker, HuffPo
Have these these links delivered to your inbox every weekday.
MARKETS/INVESTING
Gold hits new record, breaks through $1,250 – Telegraph
Stocks test price floors amid wave of selling – USA Today
Managers have worst month since November 2008: data – MarketWatch
A Riddle’s Resolution: Gold as Inflation-Proof Deflation Hedge – Reformed Broker
Recovery on Track, Worst Priced In: Goldman’s Cohen – CNBC
Why Governments Hate Gold – Ron Paul
By Tim Iacono, Since 2005
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