real #unemployment 42.9%: the warren buffett economy #scprimary

As documented in Parts 1-3 (Part 1, Part 2, Part 3), the Fed has generated a $50 trillion financial bubble since Alan Greenspan took the helm in August 1987. After 27 years, honest price discovery has been destroyed, thereby reducing the nerve centers of capitalism—-the money and capital markets—-to little more than gambling casinos.

Accordingly, speculative rent-seeking in the financial arena has replaced enterprenurial innovation and supply side investment and productivity as the modus operandi of the US economy. This has resulted in a severe diminution of main street growth and a massive redistribution of windfall wealth to the tiny share of households which own most of the financial assets. Warren Buffett’s $73 billion net worth is the poster boy for this untoward state of affairs.

unemployment

The massive and systematic falsification of asset prices which lies at the heart of this deformation of capitalism is a direct and unavoidable consequence of monetary central planning. That is, the pursuit of Keynesian business cycle management and stimulus through central bank interest rate pegging and massive monetization of existing public debt and other securities—-especially since the latter has no purpose other than to artificially goose the price of bonds and lower their yields; and also via other indirect  methods of financial asset levitation such as the Greenspan/Bernanke/Yellen doctrine of wealth effects and the implicit central bank “put” which underpins the economics of buy-the-dip speculators.

As previously indicated, the Keynesian bathtub model of a closed, volumetrically driven economy is a throwback to specious theories about the inherent business cycle instabilities of market capitalism that originated during the Great Depression. These theories were wrong then, but utterly irrelevant in today’s globally open and technologically dynamic post-industrial economy.

As reviewed in Part 3, the very idea that 12 people sitting on the FOMC can adroitly manipulate an economic ether called “aggregate demand” by means of falsifying market interest rates is a bad joke when in it comes to that part of “potential GDP” comprised of goods production capacity. In today’s world of open trade and massive excess industrial capacity, the Fed can do exactly nothing to cause the domestic steel industry’s capacity utilization rate to be 90% or 65%.

It all depends upon the marginal cost of labor, capital and materials in the vastly oversized global steel market. Indeed, the only thing that the denizens of the monetary politburo can do about capacity utilization in any domestic industry is to re-read Keynes’s 1930 essay in favor of homespun goods and weep!

As I detailed in the Great Deformation, the Great Thinker actually came out for stringent protectionism and economic autarky six years before he published the General  Theory and for good and logical reasons that his contemporary followers choose to completely ignore. Namely, protectionism and autarky are an absolutely necessary correlate to state management of the business cycle and related efforts to improve upon the unguided results generated by business, labor and investors on the free market.  Indeed, Keynes took special care to make sure that his works were always translated into German, and averred that Nazi Germany was the ideal test bed for his economic remedies.

Eighty years on from Keynes’ incomprehensible ode to statist economics and thorough-going protectionism, the idea of state management of the business cycle in one country is even more preposterous. Potential labor supply is a function of the global labor cost curve and now comes in atomized form as hours, gigs, and temp agency contractual bits, not census bureau headcounts.

In fact, the Census Bureau survey takers and the BLS numbers crunchers have not the foggiest idea as to what the real world’s potential labor force computes to, and how much of it is deployed on any given day, month or quarter. Accordingly, printing money and pegging interest rates in pursuit of “full employment”, which is the essence of the Yellen version of monetary central planning, is completely nonsensical.

Likewise, the Fed’s current “soft” target of 5.2% on the U-3 unemployment rate is downright ridiculous. When in the year 2015 you have 93 million adults not in the labor force—-of which only half are retired and receiving social security benefits(OASI)—-and a U-3 computational method that counts as “employed” anyone who works only a few hour per week—-then what you have in the resulting fraction is noise, pure and simple. The U-3 unemployment rate as a proxy for full employment does not even make it as primitive grade school economics.

At the present time, there are 210 million adult Americans between the ages of 16 and 68—to take a plausible measure of the potential work force. That amounts to 420 billion potential labor hours, if we accept the convention that all adults are at least theoretically capable of holding a full-time job (2,000 hours/year) and pulling their share of society’s need for production and work effort.

By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!

Yes, we have to allow for non-working wives, students, the disabled, early retirees and coupon clippers. We also have drifters, grifters, welfare cheats, bums and people between jobs, enrolled in training programs, on sabbaticals and much else.

But here’s the thing. There are dozens of reasons for 180 billion unemployed labor hours, but whether the Fed is monetizing $80 billion of public debt per month or not, and whether the money market interest rate is 10 bps or 35 bps doesn’t even make the top 25 reasons for unutilized adult labor. What actually drives our current 43% unemployment rate is global economic forces of cheap labor and new productive capacity throughout the EM and dozens of domestic policy and cultural factors that influence the decision to work or not.

To be sure, for a brief historical interval—-from roughly the New Economics of the Kennedy Administration to the 2007 eve of the housing crash and financial crisis—- the Fed did levitate the GDP and meaningfully impact the labor utilization rate. That was owing to the one-time trick of levering up the household and business sector through the inducements of cheap debt.

The Warren Buffett Economy——Why Its Days Are Numbered (Part 4)

 

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#benghazi seal father on #hillary #clinton: ‘#shesascumbag’ (@shoq #shoq)

The father of slain former Navy SEAL Glen Doherty who was killed in the 2012 Benghazi, Libya terrorist attack has strong words for former Secretary of State Hillary Clinton over her handling of Benghazi.

“She’s a scumbag, in my opinion,” said Ben Doherty in an interview with NECN published to coincide with Clinton’s testimony on Thursday before the House Select Committee on Benghazi.

Benghazi Glen Doherty

Glen Doherty with his father Ben, family photo via WCVB-TV.

Well I think that she pulled all the troops out of the embassy, he had no backup. He burnt alive. She said it’s no big deal, it’s a big deal to me, he’s my son and I loved him.”

Glen Doherty’s mother and the former wife of Ben, Barbara Doherty, is one of the few Benghazi family members to speak out in support of Clinton, telling NECN:

“”They’re looking at the wrong place. If you read carefully what was going on, many people made many mistakes, which is normal in confusion. After a few days, the facts were out, and they’re really chasing the wrong person.””

“”They’re hoping to defeat her and it’s not going to work.””

The Doherty family is working to close a loophole that mandates single federal contractors carry insurance but does not pay out death benefits if the contractor has no children or spouse, reported the Boston Globe.

“As an independent contractor who was unmarried and without children, Doherty was ineligible to receive death benefits afforded to military personnel under the Defense Base Act of 1941, although he was employed by the CIA, she said.

“The family is working with Congressman Stephen F. Lynch to craft a law that would remove those barriers.

“On Jan. 26, Lynch introduced The Glen Anthony Doherty Overseas Security Personnel Fairness Act.

““It is unacceptable that the Defense Base Act requires federal workers to take out an insurance policy before they are deployed overseas and accepts the payment of insurance premiums from those workers, but fails to provide death benefits to their families or estate solely based on marital and child status,” Lynch stated on his website.”

Kristinn Taylor: Benghazi Victim’s Father on Hillary Clinton: ‘She’s a ‘Scumbag’

global terror (#islam) spiked 81% in 2014 (@barackobama’s islam killed 32,727)

WASHINGTON, June 19 (UPI) — The State Department said the number of terrorist attacks and people killed by terrorists worldwide spiked in 2014, largely due to the rise in Islamic State extremists in the Middle East and the Boko Haram in Africa.

The annual Country Report on Terrorism found terror groups have ramped up their ability to inflict mass casualties, saying the total number of terrorist-attack-related fatalities jumped 81 percent to 32,727 in 2014. The total number of attacks increased by 35 percent to 13,463. Pakistan and India terrorist activities also contributed to the increase, the report said. More than 9,400 people were taken hostage or kidnapped, three times more than in 2013.

The report stated the IS, also known as ISIS and ISIL, has replaced al-Qaida as a major extremist group.

“The prominence of the threat once posed by core al-Qaida diminished in 2014, largely as a result of continued leadership losses suffered by the AQ core in Pakistan and Afghanistan,” the report said. “AQ leadership also appeared to lose momentum as the self-styled leader of a global movement in the face of ISIL’s rapid expansion and proclamation of a Caliphate.”

When asked by reporters at a State Department briefing Friday about the effectiveness of the U.S. in combating terrorism globally, Tina Kaidanow, the department’s coordinator for counterterrorism, said “the numbers don’t tell the whole story.”

“They’re geographically very much in conflict areas and the lethality of those attacks have really gone up because of the savagery of them,” she said.

The report blamed weak and failed governments, especially in Syria, Iraq, Yemen and Libya, for offering an “enabling environment” for such groups.

State Department: Global terror-attack fatalities spiked 81 percent in 2014

the fbi dumps fascist hate group @splcenter

Something called the Southern Poverty Law Center sounds like a harmless do-good organization of idealistic young lawyers out to make life better for poor folks in the South, most of them likely black. Who wouldn’t want to make life better for poor folks?

But looks can be deceiving. The poverty law center, known by its initials SPLC, is actually a money-making scheme — some have called it a “scam” — of an Alabama lawyer who set out years ago to get rich on the backs of the poor and the duped.

The lawyer, Morris Dees, once defended Ku Klux Klansmen accused of beating up a black reporter covering the Freedom Riders, later raised money for George Wallace and then for George McGovern, and one day had an epiphany, or at least a profitable idea.

“I felt the anger of a black person for the first time,” he later said of that case, “I vowed then and there that nobody would ever again doubt where I stood.”

Where he stood was a place where he could parlay the good will of the unsuspecting into great riches. Mr. Dees and a partner, Millard Fuller, practiced law and ran a direct-marketing business. He made a good living, but he wanted to get rich.

“Morris and I … shared the overriding purpose of making a pile of money,” the partner once told Harper’s magazine. “We were not particular about how we did it. We just wanted to be independently rich.”

With his conscience in tatters, Millard Fuller sold his share of the business to Mr. Dees, gave the proceeds to charity, moved away and founded Habitat for Humanity, building houses for the poor.

Morris Dees stayed in Alabama and built a 200-acre estate with tennis courts, a swimming pool and stables for his horses, and instead of doing good, did well.

“Poverty” quickly became enormously profitable. He was soon collecting millions and paying himself a salary far in excess of those paid to the heads of such advocacy groups as the ACLU, the Children’s Defense Fund and the NAACP Legal Defense Fund.

The director of the Atlanta-based Southern Center for Human Rights, which defends poor defendants in death-penalty cases, once told Mr. Dees he was “a fraud and a con man” because of “your failure to respond to the most desperate needs of the poor and powerless despite your millions upon millions, your fundraising techniques, and the fact that you spend so much, accomplish so little, and promote yourself so shamelessly.”

Mr. Dees and his “center” continued to slander the innocent and raise money from the unsuspecting, warning in fundraising appeals of “a firestorm” of hate that would soon “engulf the land.”

The SPLC never identifies the hate groups about to engulf the land, who they are or where they are assembling their regiments of engulfers. With the Ku Klux Klan shrinking to insignificance, the SPLC, which is thought to be sitting on a treasury of a quarter of a billion dollars, has lately turned its lurid appeals to prosperous but frightened gays.

“Hate crimes” by SPLC definition now include Christian opposition to same-sex marriage.

This week it emerged that the FBI, which has included SPLC data as “a resource,” has finally severed its link with the organization and dumped SPLC from the bureau’s Hate Crime Web page.

The FBI offered no explanation of why now, but the dumping follows appeals of 15 family groups to Attorney General Eric Holder Jr. and FBI Director James B. Comey to sever the connection. We think that was a good day’s work.

Washington Times: The FBI dumps a ‘hate group’

#trump: i’d ‘love’ to have #palin in my admin in an official capacity (#palin2016)

Republican presidential candidate Donald Trump said he would “love” to have former Alaska Governor and GOP vice presidential candidate Sarah Palin in his campaign in an official capacity on Monday’s broadcast of “The Palin Update” on Mama Grizzly Radio.

Trump said of Palin being “along in some official capacity, “I’d love that.” He continued, “Because she really is somebody that knows what’s happening, and she’s a special person, she’s really a special person, and I think people know that. And she’s got a following that’s unbelievable. … Everybody loves her.”

He added that the other GOP candidates are “weak” and “ineffective,” and “the Sarah Palin kind of strength, you just don’t see very much of it anymore.”

(h/t Right Wing Watch)

TRUMP: I’D ‘LOVE’ TO HAVE PALIN IN MY ADMIN IN AN OFFICIAL CAPACITY

Donald Trump Would Consider Tapping Sarah Palin For Future Trump Administration

#trump interview: ‘admire #palin’ political media ‘amazingly dishonest’ (#palin2016)

In the Palin Update radio program released Monday, host Kevin Scholla interviews 2016 Presidential candidate and American success story Donald Trump, offers his admiration for Governor Palin.

In addition, Trump gave his take on the “amazingly dishonest” political media, taking on “weak, ineffective” politicians in both major political parties, the pathetic treatment of veterans, “nuclear climate change,” his run for the White House, and how he plans to make America great again.

Scholla opened by noting the massive media attacks against Trump, reminiscent of severe attacks on former Alaska Governor Sarah Palin.

“One of the things I most admire about her (Palin) is that she took so much nonsense, lies and disgusting lies. She handles it so well. She’s tough and smart and just a great woman so it’s an honor to be with you today,” Trump said. “I still have people saying, get Sarah’s support, get Sarah’s support, no matter where I go…everybody loves her.”

Scholla recalled that Palin and Trump have had several meetings, including one during Palin’s Monument Tour, when they sat down for pizza in New York City.

Scholla asked Trump whether he would seek out Palin’s counsel or might he bring her along in an “official capacity” in the event of a Trump administration.

“I’d love that because she really is somebody that knows what’s happening,” Trump responded. He noted that her “following that is unbelievable,” calling those supporters a “tremendously loyal group of people out there for her. I think now maybe more so than ever.” He continued, “I’m looking at some of these candidates, they’re weak, they’re ineffective.”

Trump referenced the volumes of Americans that “like the Sarah Palin kind of strength. You just don’t see very much of it anymore.”

Scholla asked Trump about calling out weak politicians such as Barack Obama and Hillary Clinton, as well as Jeb Bush,

Sen. John McCain (R-AZ)

43%

, and Lindsay Graham.

“That’s right they’re not doing their job,” Trump responded. “You look at what’s happening with the veterans. The veterans are being treated like third class citizens. It’s horrible what’s going on and John McCain is so involved with the veterans, but nothing happens because they’re politicians ultimately.”

Trump then went after selective media reporting. “It’s interesting, cause I know the same thing would happen to Sarah a lot. When somebody attacks me viciously, you know they call me names, horrible names, then I attack them (attackers), they (media) don’t report what they other people said so it looks like I’m just, out of nowhere making things up about like a Lindsay Graham or this character Rick Perry. That’s another beauty, all of a sudden he attacks and you attack back and you say something very rational, but they (media) don’t show that you aren’t the one that started it.”

“The political media is amazingly dishonest,” Trump told the listening audience.

Last week Palin commented on McCain and Trump based on her relationship with each of the two men. “Both men have more in common than the today’s media hype would have you believe.” She noted McCain’s heroic service to the country as well as Trump’s heroism “in another arena.”

Trump is the candidate giving voice to untold millions of fed-up Americans witnessing a purposeful destruction of our economy and the equal opportunity for success that made America exceptional. We’re watching career politicians throw away our kids’ future through bankrupting public budgets and ripping open our porous borders which, obvious to all us non-politicians, puts us at great risk. Everywhere I go, hard-working patriotic Americans – not “crazies” or “wacko birds” – ask me to pass on to Mr. Trump encouragement to keep educating the masses about true ramifications of illegal immigration, and in general the real state of our union.

Trump referenced a recent poll out of Nevada, which he commented on during his trip to the U.S.-Mexico border last week as well. The poll puts him significantly in the lead of the GOP field of 2016 Presidential candidates and shows considerable Hispanic support. Trump said this is because he will bring back jobs, and that is what resonates with Americans. His campaign slogan, “Make America Great Again.”

“The real climate change is going to be nuclear climate change if we’re not smart and tough and very, very careful cause that’s a big danger and that’s a real danger,” Trump then commented regarding Obama’s climate change agenda. “We have people chopping off heads and he’s (Obama) talking about climate change.”

The 2016 candidate recalled some early work on former President Ronald Reagan’s campaign.

Trump and Scholla discussed recent events involving Planned Parenthood, the Chattanooga attack, and the Iran deal. They noted the proclivity of many candidates today to check polling data before issuing their opinions on issues instead of speaking with conviction from the heart.

Trump noted Bush’s apprehension in answering with his position onwhether going into Iraq was a good idea. “You have to say what’s in your heart, what’s in your brain and you have to be honest. I mean these guys go back, they don’t want to give an answer until they have it polled and that’s not government in my opinion.”

Both Palin and Trump have stared down aggressive media attacks. Palin commented on June 17, “Mr. Trump should know he’s doing something right when the malcontents go ballistic in the press! There is no denying Donald J. Trump‘s accomplishments and drive to create opportunity for every willing American to succeed.”

Trump called Palin revered, saying she, “is somebody that people respect and admire and she speaks to so many people. I don’t think even think she knows how important she is and maybe that’s part of the beauty of Sarah Palin.”

Trump closed, “Right now this country’s going down and its going down badly and quickly and Sarah understood that maybe earlier than most, but our country’s going down and we have to make it great again.”

Scholla told Breitbart News following the interview, “Mr. Trump is a good man who cares deeply for our veterans and America as a whole. Just like Sarah Palin he’s not afraid to call out politicians from either side of the aisle if they are doing harm to our nation. In talking to Mr. Trump I get the sense that he is genuine. His admiration for Governor Palin is undeniable and there’s no doubt he loves our exceptional country.”

You can listen to the program and interview in its entirety at Mama Grizzly Radio.

TRUMP INTERVIEW: ‘ADMIRE PALIN,’ POLITICAL MEDIA ‘AMAZINGLY DISHONEST,’ REAL CLIMATE CHANGE ‘NUCLEAR’