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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: redfrecknj who wrote (25991)	2/7/2005 9:32:32 PM
From: Skywatcher	Respond to of 110194

here goes the funny numbers once again The King Report M. Ramsey King Securities, Inc. Monday Feb. 7, 2005 – Issue 3092 "Independent View of the News" Please note that the BLS only deleted 280k jobs this January, as opposed to the 321k it deleted last year. This means that the BLS in effect ‘added’ 41k jobs on a y/y basis. Without this bonus, non-farm payrolls would’ve been only 105k. Also note that Q4 ’04 jobs were revised lower by 59k. Manufacturing jobs were horrid, down 25k with +5k expected; December was revised to -7k from +3k. The last three months, 137k jobs/month were created. 150k jobs must be created per month just to absorb working-population growth…The average workweek fell to 33.7 hours from 33.8 hours…The unemployment rate fell to 5.2% from 5.4% because 224k workers quit looking for work (discouraged). This forced the ‘participation rate’ down to 65.8%, the lowest level since 1998. The BLS adjusted both December and November Net Birth/Death Model jobs. They adjusted December up to 66k from 62k, but November was adjusted lower, to 9k from 30k. This refutes those that claimed or will claim that lower Christmas-related hiring would keep the BLS from deducting as many jobs as last year. The BLS adjusted November and December B/D Model jobs 17k lower, but they truncated January deletions by 41k. This means the BLS in effect created 24k more jobs over those three months y/y. Though the BLS asserts that the Net Birth/Death Model is not seasonally adjusted, the past two+ years of dynamic monthly changes appear to follow the seasonal pattern of job creation. Do start up businesses created and destroy jobs as quickly as larger, established enterprises?...Where is the explanation for the BLS methodology? Numbers are meaningless if one does not know how they were derived or compiled. Last we averred that though The Street once again forecast a great employment report, the odds were extremely high that it would be disappointing due to the dictates of the CES Business Birth/Death Model that guesses how many jobs are created/destroyed in start up or micro businesses. For the past year or so, we’ve been able to regularly out-guess The Street just by using the numbers from the B/D Model. When the model went dynamic a couple years ago, the BLS started changing the monthly totals from the static (same number until the model was adjusted) addition that began in 1985. Two years ago, the BLS started deleted jobs. A criticism of the model since its inception was that it never accounted for start-up businesses that go bust. But BLS only deletes jobs twice a year – January and July. So, that’s how we reasoned that Friday’s report would be soft. However, we thought that stocks would decline because operators were buying stocks in expectation of a good report that would show the economy is getting jiggy again. That did not transpire; stocks rallied sharply. So what sent stocks soaring on Friday? AMG figures, issued on Thursday evening, showed $4.3B poured into mutual funds for the week end Feb.2, the first significant inflow in 2005. And on Friday, Easy Al waxed wonderment about how the US current account would start shrinking due to the new fiscal restraint that Bush has proposed. AP: "President Bush's $2.5 trillion budget is shaping up as his most austere, trying to restrain spending across a wide swath of government from popular farm subsidies to poor people's health programs." apnews.myway.com And as the chart below shows, Easy Al went back to supplying the juice last week. A couple years ago Al instituted a de facto zero interest rate monetary policy and the most simulative fiscal policy since LBJ or FDR depending on the counting. And what did we get out of that? Crony capitalists flourished in the ‘get me out rally’. But the US has experienced the worst recovery in jobs and income since WWII or The Great Depression, depending on the counting. If all the steroid stimulation is now not only removed, but rescinded, what is likely the economy like to do? We’d guess a wicked readjustment in the economy must occur. The severity depends on: 1) Easy Al’s attempt to euchre the market and 2) the orderliness at which the over-levered economy readjusts. Bush’s fiscal profligacy was a self-serving ploy to get re-elected. Easy Al’s monetary promiscuity was also self-serving. He wanted to be re-elected as Fed CEO so he could set the record for longest reign. Bush no longer needs to be self-serving in the next year or so. Easy Al must leave the Fed next February when his 12-year NY Fed term expires. Al might desire to exit with things still jiggy. This raises our suspicion, as we have remarked regularly, that Easy Al will attempt the monetary sleight-of-hand that he performed in 1994 when he raised interest rates but allowed, or caused, adjusted Fed credit and the money base to increase by double-digit amounts.

To: redfrecknj who wrote (25991)	2/7/2005 9:54:12 PM
From: ild	Read Replies (1) \| Respond to of 110194

Nice post. Very close to what Bill Gross said: I mentioned that future IOUs would be of little help in providing senior boomer goods and services but there’s little doubt that the minimizing of those IOUs will make the job a lot easier. By reducing budget deficits now, and especially that portion of the deficit owed to foreign governments, we would be able to keep more of our domestic production within our borders and therefore available to senior citizens pimco.com

To: redfrecknj who wrote (25991)	2/7/2005 9:54:56 PM
From: Colin H	Respond to of 110194

What the government is attempting to accomplish is essentially default on the promise to honor the bonds in the trust fund. The government is telling us that that all that extra FICA money that we sent them is spent, and they are not going to raise taxes to repay it. hm... seems to me we could use a good old Whiskey Rebellion. Let people know they cant just take money and be completely frivolous with it without any consequences. ;)

To: redfrecknj who wrote (25991)	2/7/2005 10:16:57 PM
From: Larry S.	Respond to of 110194

redfrecknj, Yes, I understand very well what you are saying and under the Unified Budget (UB) it is all true in some sense. However, before the UB was introduced/adopted, SS accounting was in a separate organization of Government - sparate financially. There was no such thing as a unified budget number. There were no On- or Off-Bidget items. The budget and accounting was essentially what is now considered On-budget. It was recognized that SS was separately taxed and accounted for. I suggest, if you haven't done it, take time to read through one of the Monthy Treaury Statements. The fact that the special treauries are just numbers in a computer doesn't make them any less of an obligation then treauries issued as a piece of paper. Most securities these days are nothing more than accounting entries. But most importantly, I think you could be right on with your thoughts about what all this talk is about. I believe Greenscam is frightened to death that people are going to wake up one day soon and realize that the deficit is dramatically larger than reported. We don't have to wait until 2018 before there is no longer surplus revenues from SS to continue the illusion of a lower deficit. Interest payments will carry it several years before payroll tax revenue together with interest on the TF balance fails to cover benefits. Larry

To: redfrecknj who wrote (25991)	2/8/2005 12:13:18 PM
From: benwood	Respond to of 110194

"What the government is attempting to accomplish is essentially default on the promise to honor the bonds in the trust fund. " In Greenie's speech a few months ago, he as much as said this. He said keep tax breaks for the wealthy but gut SS now because taxes will not be going up to repay those bonds when payouts exceed revenues. I don't think you can get any plainer than that. I believe everything between now and then will be designed to make sure that the trust fund was stolen fair and square. Here was an alternate possibility -- not run a frickin' debt and have a trust fund that is actually an asset not a piece of paper. Then it can be sold off as needed, same as a trust fund at a university. But no, everybody loves to live in the denial of we'll pay it off in the future, when we're dead.