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David Stockman, former Michigan congressman and Reagan budget director, takes no prisoners as he contemplates the lastest jobs report. Remember when everybody was so pleased with 195,000 new jobs created in June? Turns out 120,000 of those jobs were part-time jobs in restaurants, bars, hotels, retail, and temp agencies. Now we can call him President Part-Time.
No, last week’s jobs report was not “strong”. It was just another edition of the “born again” jobs scam that has been fueling the illusion of recovery during the entire post-crisis Bernanke Bubble. In fact, 120,000 or 62 percent of the June payroll gain consisted of part-time jobs in restaurants, bars, hotels, retail and temp agencies. The average pay check in this segment amounts to barely $20,000 per year, which is a sub-poverty level income for a family of four, and compares to upwards of $50,000 per year for goods producing jobs in the BLS survey.
Altogether, the government has reported 2.8 million of these part-time job gains since the Great Recession officially ended in June 2009, accounting for a predominant share of the ballyhooed pick-up of 5.3 million total jobs. It goes without saying, however, that the principal of one-job-one-vote does not apply in economics. What matters are aggregate dollar earnings. On that front, the Commerce Department figures for total private wage and salary income are just plain punk. Nearly six years on from the December 2007 peak, real payroll disbursements are still down by nearly 1 percent. What kind of “recovery” is that about?
Measured on an income equivalent basis, then, a majority of the big rebound in the BLS headline number has consisted of “40 percent jobs”. Granted, these fractional jobs do provide a monthly feed to headline stalking HFT algos and the gist for the moronic jobs number guessing game conducted by unemployable Wall Street executives otherwise known as “street economists”. But not by a long shot do they prove that the Fed’s money printing spree is beginning to bear fruit, as claimed by the cheerleading section of the Wall Street Journal shortly after the BLS release.
Indeed, once upon a time financial journalists actually worked for a living by digging for facts, rather than simply re-posting the spin issued by Washington’s various ministries of truth. In this instance, even a modicum of investigation by the WSJ would have revealed that the 2.8 million part-time jobs “created” since June 2009 reflect the rebirth of the very same 2.8 million jobs that were first generated between 2000 and 2007. That this obvious fact has been completely ignored is not surprising. After all, the reigning doctrine in the Keynesian puzzle palace inhabited by officialdom and financial journalists alike, calls for digging and refilling economic holes as the national policy of first resort.
The BLS data exhibit this syndrome with uncanny exactitude. In early 2000 there were 34.7 million jobs in the part-time economy. In response to the dotcom crash, the Fed ignited the housing and credit bubbles via Greenspan’s 1% money experiment, causing a consumption boom fueled by home ATM withdrawals and other consumer borrowings. Accordingly, activity rates in leisure and hospitality, retail and personal services (think yoga teachers and gardeners) temporarily soared, with the part-time job count climbing by the aforesaid 2.8 million by late 2007. But this peak of 37.2 million part time jobs was pure bubble economics— attested to by the fact that every single one of these new jobs vanished during the 18 months of bubble liquidation otherwise known as the Great Recession. Indeed, when the NBER declared the bottom in June 2009, the part-time job count stood at 34.5 million, a hair under where it started at the turn of the century. …
… In short, Fed policies are mangling the Main Street economy by disabling the pricing mechanism in all financial markets, diverting capital to unproductive speculation and rent-seeking and leaving genuine entrepreneurs and businessmen adrift in a fog of financial disorder. Needless to say, the result is tepid growth of incomes and jobs—-a lamentable condition that the Fed cannot fix with “moar” monetary stimulus because decades of the latter are what has caused the problem.
More importantly, the impossibility of fixing a structural problem with Keynesian cyclical medicine means that the monetary politburo will descend into an ever more incoherent babble as the “incoming data” fail to match its clueless forecasts. In this regard, not only were Wednesday’s minutes an embarrassing exercise in Washington pettifoggery, they were also self-evidently a fraud and lie—–spun well after the meeting in an attempt to undo Bernanke’s original message. It is bad enough that the nation’s vast, infinitely complex $16 trillion economy is being run by an unelected 12-person monetary politburo. But now the commissars have completely lost both their bearings and their credibility.
Under these circumstances healthy capitalist financial markets would be afraid—very afraid. But there are no honest markets left—-just a big romper room where the boys and girls and algos endeavor to extract windfalls from central bank word clouds. Still, the magnitude of the deformation that the Fed has wrought in the financial system cannot be under-estimated: there remain even now tens of thousands of punters, fund managers and home gamers who do not see the Fed’s desperate incoherence, believing instead that “the market is cheap” and that buying the dips is a no loose proposition.
Let’s see. At the last bubble peak in early October 2007, the S&P 500 was only 100 points (or 5%) below today’s lofty peak, and it was deemed to be cheap by the 11th hour bulls at that moment because forward earnings were projected to be $110 per share, thereby trading at less than 16X. As it happened, 2008 earnings ex-items came in more than a tad lower—- at $55 per share to be precise and actually at only $15 on the basis of honestly reported GAAP earnings.
In truth, at that moment in time financial bubbles—subprime, CDOs, monster LBOs, a raging Russell 2000— were evident everywhere in the financial system. So in late 2007 the market was not cheap even on a paint by the numbers basis. At the end of the day, the only honest and reliable earnings number in today’s deformed capital markets is 12 month trailing GAAP EPS. The billions that Washington wastes on financial cops each year policing corporate SEC filings at least accomplish that much. At the 2007 peak, therefore, the market was actually trading at 19X earnings on an honestly accounted basis.
So here we are again, and the LTM earnings number on a GAAP basis for the S&P 500 is $87.50 per share. We are back at 19X trailing profits. Too be sure, forward earnings ex-items are exactly as before—once again at $110 per share. So the market is purportedly “cheap” but here’s the skunk in the woodpile: honest LTM GAAP earnings have been stuck at $87 per S&P 500 share for seven quarters—since Q3 2011. In short, true earnings are not growing, China and the BRICs are rolling over, Europe is sinking into economic somnolence, Japan is a massive financial train-wreck waiting to happen, and based on the latest data it would appear that US GDP growth will average hardly 1% during the three-quarters thru June. That’s stall speed, yet the gambling machines which occupy Wall Street rage on because they believe that Bernanke has their back, that this business cycle will never end and that this latest and greatest financial bubble will never be allowed to collapse. …
Peter Wehner on the “lawless” president.
Both Charles Krauthammer and Ramesh Ponnuru have spoken about the lawlessness of the Obama administration. Examples include (but are not limited to) unilaterally delaying implementation of the Affordable Care Act’s employer mandate, issuing health-care edicts that undermine the Religious Freedom Restoration Act, making unconstitutional “recess appointments” to the National Labor Relations Board and the Consumer Financial Protection Bureau, refusing to enforce current immigration laws related to illegal immigrants who were brought to America as children, and waving welfare work requirements.
This is all part of a pattern in which Mr. Obama enforces laws he likes and refuses to enforce (or unilaterally alters) laws he disagrees with. I suppose the temptation to act as a potentate is understandable; but it also happens to be illegal. The president, after all, has the constitutional duty to “take care that the Laws be faithfully executed” (see Article II, Section 3 for more). ..
Andy McCarthy has more in this vein.
Obama has never been clear on the distinction between sovereign and servant, between the American people and those, including himself, elected to do the people’s business. We saw that yet again this week with the president’s unilateral rewrite of the Bataan Death March known as the Affordable Care Act — Obamacare. For this president, laws are not binding expressions of the popular will, but trifling recommendations to be ignored when expedient.
The collapse of law — not just Obamacare but law in general — is the Obama administration’s most egregious scandal. With the IRS here, Benghazi there, and Eric Holder’s institutionalized malevolence crowding the middle, it gets little direct attention. Perhaps it is so ubiquitous, so quotidian, that we’ve become inured to it.
Above all else, though, the office of the president was created to take care that the laws be faithfully executed. For this president, to the contrary, law is non-existent — and not merely law in the traditional sense of our aspiration to be “a nation of laws not men.” Obama has contorted the law into a weapon against our constitutional order of divided powers and equal protection for every American. …
… The faithful execution of laws is never partisan; under Obama, the execution of laws is intensely partisan. He purports to make “recess appointments” when Congress is not in recess. He skirts Congress’s constitutional war powers by pretending that attacking another country (Libya) is not making war. If his core supporters are damaged by the suffocating laws he champions — most prominently, Obamacare — he claims the power to “waive” their provisions selectively. Meanwhile, huge bureaucracies are encouraged, expressly or by nod-and-wink, to harass the president’s opponents and push forward his redistributionist, production-strangling, Islamist-empowering agenda. The executive order — formerly an intra-branch efficiency device designed to organize the exercise of the president’s constitutional powers and the enforcement of Congress’s laws — has effectively become legislation, the president substituting his edicts for our laws. …
Media Bistro has a screen shot of the Oakland TV station announcing the names of the pilots of the Asiana plane. The lead pilot was Capt. Sum Ting Wong. Co-pilot was Wi Tu Lo.
On today’s Noon newscast on KTVU, the station claimed it had “just learned the names of the 4 pilots on board” Asiana flight 214 which crashed last Saturday. But the station was given bad information that made it all the way into the newscast. If you read the names it becomes immediately clear this is a joke, which went unnoticed by the newsroom, producers and the anchor.
You’ll recall earlier this week, KTVU touted its coverage as being not only first, but “100% accurate.”