2008 Redux Times 10 Is Brewing

Using the “jobless claims” metric,  the financial media and snake oil salesmen would have us believe that the Government-compiled jobs market metrics indicate “sustained strength in the labor market that should further dispel fears of a recession”  – Reuters’ Animal Farm.

A reader asks:  “if the jobs market is so good why did my bilingual daughter, who graduated with a 3.8 GPA from Ga. Tech [Dr. Paul Craig Roberts’ undergrad school], not get a job offer for two months until someone I know hired her?”

A funny thing, those Government compiled, manipulated and propagated reports.  I answered with:   “She was fishing in the wrong fishing hole for jobs – she should have been sending her resume to Burger King and Starbucks.  But it sounds like the service sector is starting to shed jobs as well.  I honestly don’t know how they are coming up with their jobs reports.  As for the jobless claims, it makes sense that the claims are dropping like this.  As the labor force shrinks, especially the component that would qualify for jobless benefits, the number of people who file for jobless benefits shrinks, right?”

The first time I read “1984,”  I tried to imagine Orwell’s vision superimposed on the United States.  Now I don’t have to imagine.  Instead of Big Brother spying on us through our televisions (and they might through “smart” tvs), the Government monitors us through our cell phones, emails and web-browsing.  It’s truly frightening and it’s quite stunning how so few in this country understand – or are willing to accept – the degree to which it occurs on a daily basis.

While the Ministry of Propaganda spins its wheels convincing the public of a new bull market in stocks and a robust economic recovery are both in process – bolstered by a job market with more alleged openings than bodies willing to fill those alleged openings – the underlying structure of the economic and financial system is quickly rotting away.

Zerohedge reports today that the yield spread between 2-yr and 30-yr Treasuries is at its lowest (the difference between the yield on the 2yr Treasury and the 30yr Treasury) since its low-point in 2008 – A Flat Yield Curve Spells Recession.  There’s yet another comparison between 2008 and now.

The fundamental problems which caused the 2008 de facto financial collapse were never fixed.  Instead, they were “treated” with money printing and the massive expansion of credit.  While this enabled the operators benefiting from these subtle and insidious this wealth transfer mechanisms, it also seeded the next big systemic earthquake, which has the potential to be 10x worse than 2008.

Notwithstanding the Fed’s omnipresent intervention in the interest rate markets (Treasuries, repos, Fed funds and interest rate swap derivatives), the Fed has been unable to prevent a “flattening” of the yield curve.   A flat yield curve is the Treasury market’s signal that the U.S. is going into a recession.  Without that Fed intervention the Treasury would be inverted, a market event that verifies a deep recession in process.

While treating the problems with negative interest rates, money printing, debt creation and the continuous effort to systematically control the markets may temporarily cover up the symptoms of the underlying problems,  it is analogous to rubbing Neosporin on melanoma.  Eventually that cancerous mole will manifest as untreatable lymphoma.

The U.S. economic and political system is on the verge of a systemic disruption that will make life difficult for the entire population.  It’s anyone’s guess when the catalyst hits that pushes that button, but the force with which the next 2008 times 10 hits will likely even shock and awe those of us who can see that something ugly is about to hit.

2 thoughts on “2008 Redux Times 10 Is Brewing

  1. Plunge Protection Team has busy meddling in the markets as usual. Crude seems to be the only thing propping up the markets right now. Without the PPT interventions,
    the S+P should be at 400-600 with gold at $4500 and silver over $150.

    They will get run over soon enough and AVERAGE JOE will get that 2×4 in the face feeling that he justly deserves. Attaboy Dave!

  2. Just read an article on yahoo news. This particular passage got my attention. Why is there no outrage regarding this sorry state of affairs? The sad, ugly truth is right there but no one seems to notice it. Why are the headlines only about the so called low unemployment rate of 4.9% but not about Americans’ falling income plus the double whammy of rising housing costs dealing a crippling blow to their standard of life?

    “While the unemployment rate today is a low 4.9%, the labor force participation rate–the portion of eligible adults either working or looking for work–has been falling for 15 years and is now at the same level as in 1977, before women joined the labor force in large numbers. The U.S. economy has more jobs than ever, but household income, adjusted for inflation, is still lower than it was in 2000. By definition, that means the typical family is earning less.”

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