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Monday, October 4, 2010

Understanding News- upcoming Jobs Report for Friday 10/9

~  The following article is from CNBC-  Any bold or underlined words is from me

"Why Friday's Jobs Report Is Expected To Be So Gloomy" -CNBC

"September probably offered little relief in the nation's vexing unemployment problem, setting the stage for more Fed intervention that experts give only dubious prospects for success."

~ This means Quantatative Easing- in layperson terms, the Treasury will add to the National Debt by printing more money backed by nothing but the paper its printed on, in the hopes it can kick the economy into gear, much like one would kick-start a motorbike.

 "Economists expect Friday's jobs numbers to be a wash-private payrolls likely increased 75,000 but the government cut another 78,000 Census workers from its payrolls.

"When factoring in the other variables, that probably means zero jobs growth and an unemployment rate inching up to 9.7 percent from 9.6 percent, mainly because more unemployed people rejoined the search for work.

~ The true unemployment rate in the country is around 17%. That's 1 in 6 Americans. Since the Clinton years, several factors, called U6 are not counted as important in the gathering of accurate unemployment statistics, so the monthly figures can always appear lower than they are.   U6 includes:

  • U1: Percentage of labor force unemployed 15 weeks or longer.
  • U2: Percentage of labor force who lost jobs or completed temp work.
  • U3: Official unemployment rate per ILO definition.
  • U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
  • U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently.
  • U6: U5 + Part time workers who want to work full time, but cannot due to economic reasons; underemployment
 All these unemployed people do not 'count' or matter to the system..  let's continue...  

 " "We're settling into what I would call this slow-growth mode that will be with us until we have resolved some structural problems in our economy. How long that is going to take nobody knows-it could be several quarters or several years," says Bart van Ark, chief economist at the Conference Board. "Everybody's just incredibly cautious because we are beginning to realize this was one of the worst recessions and not just a cyclical thing.""

"That's hardly what was expected when the government began spending its $810 billion in stimulus funds that was supposed to drive the unemployment rate down to about 8 percent by now.   What has happened instead has been a slog through very slow growth in which GDP could rise as little as 1.5 percent in the third quarter, according to some estimates"

~ Economists were staying as far back as late 2009 that they expected the initial stimulus would provide a 'sugar high' and pump the GDP in the end of '09 and first half of 2010 but when the money ran out, the economy would lose steam.  Of course like grasshoppers, the government did nothing to prepare for this reality prior to the present.  Now there's a scramble to figure out the best course of action.

""With a lot of the spending, it doesn't seem to be sticking here. It's going somewhere else," says Doug Roberts, chief investment strategist for Channel Capital Research in Shrewsbury, N.J. "In the near future, nothing seems to be ready to radically reverse this.""

~ Yes, the money is going to the banks. Its going to the stock market.  Its going into endeavors that either cut taxes or offer loans to businesses- yet nothing to specifically focus on job growth, or more importantly, forcing businesses via "carrot/stick" to hire instead of hoarding cash reserves and using temp labor

"Enter the Federal Reserve.  The US central bank is expected to announce some form of quantitative easing-essentially the printing of money-as soon as its November meeting. A weak jobs report Friday likely would give Chairman Ben Bernanke and the rest of the Fed governors strong impetus to justify stepping in and taking other measures to drive down interest rates."

~ The Fed has no choice.  In a memo Goldman Sachs released on Friday, they fully expect the Fed to pump at least another $500 billion into the system.  The markets are priced for this to occur. Since the Fed doesn't meet again until Feb, 2011, if they do not print more money into the system, the market will purposely crash, like the financials did in 2008 after Congress initially voted against TARP

"But doubts linger about whether the Fed will be able to spur the economy.  After all, the central bank's policies have yielded mixed success at best, with a $2.5 trillion balance sheet expansion still leaving the economy with near double-digit unemployment and consumer and business confidence weak."

~   If the Jobs Report is even a smidge better than people are thinking, expect the markets to irrationally go up a couple hundred points.  If the report is accurate or on the mark, expect the markets to go up just 50-100pts.  I say this because those who make their living in the stock market are soulless, non-violent sociopaths with no emotional connection to country or community; they only care to have more money at day's end than when the day began.    

But understand that no matter what the markets do this week and beyond, the national and global economy is in a world of hurt. 

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