Category Archives: U.S. Economy

The West Is Collapsing As The East Ascends

The 24 Mega Green City infrastructure project in India will connect Delhi with Mumbai, creating a commerce corridor incorporating 21st century technologies and amenities. – Interview with ZincOne Resources’ Jim Walchuck, The Daily Coin

It seems absurd that Asia is willing and able to build high-speed “bullet” trains to connect large population centers while the United States struggles with an antiquated Amtrak rail system often beset with service interruptions and lethal accidents.   The truth of the matter is that the major U.S. metropolitan areas are beset with massive loads of debt, including a ticking-time debt-bomb in the form of several trillion dollars in unfunded public pension funds.

The Delhi-Mumbai Industrial Corridor is a major infrastructure project that India is developing with Japan. The project will upgrade nine mega industrial zones as well as the country’s high-speed freight line, three ports, and six airports. A 4,000 MW power plant and a six-lane intersection-free expressway will also be constructed, which will connect the country’s political and financial capitals.  – The Daily Coin

The 24 Mega City project underscores the economic, political and cultural contrast between the eastern and western hemisphere countries, with the sun setting in the west and rising in the east.  The west is mired in a catastrophic web of Government-heavy economies that exist on the life support of trillions in money printing and debt issuance. True, some countries like China have relatively high debt levels but they are offsetting that form of fiat currency debasement with massive gold accumulation.  The heart of the problem is highlighted by the graphic below (click to enlarge):

The budget for the U.S. Government will primarily be spent on social security, defense, medicare/medicaid and interest on the Government’s debt. Those five items will burn more two-thirds of the Government’s budgeted expenditures in Fiscal Year 2017.

But don’t bother asking how the Government plans on paying for that.   The funds will come from oldest forms of currency debasement: money printing and debt issuance.  And Trump’s proposed spending agenda will accelerate the growth rate of both .

It’s amazing that the U.S. Government seems to have unlimited funds available to spend on guns, bullets and surveillance of the citizenry.   Ranked in order of expenditures, The U.S. spends more on its military than the next 14 highest ranked countries.  “On the books,” the U.S. spent $597 billion in 2015.  That was 4x more than China and 9x more than Russia (source:  International Institute for Strategic Studies).

While the west, led by the United States, advances its collapse with rampant currency debasement and unbridled imperialism, the east is investing its resources in the future – in the advancement of its civilization.  Perhaps the hallmark of this contrast is best represented by the flow of physical gold from west to east.  The Shadow of Truth has devoted today’s episode discussing some of the signs pointing to the collapse of the west and the rise of the east:

The Big Short Part Two

Truth is like poetry. And most people f*cking hate poetry. – from “The Big Short”

Ron Paul was on Fox Business last week explaining that stocks and bonds are in a big bubble. He said that, “you need to short this market.” As is my modus operandi, I had the volume muted so I didn’t get hear the Fox hosts’ exasperation. Interestingly, it was reported last week that the short interest in the S&P 500 ETF (SPY) hit an all-time low on March 7th. This is a fantastic contrarian indicator. It also removes the general “short-squeeze” risk from the risk of shorting the market.

Perhaps more curious than Ron Paul’s comments was the warning about the stock market issued by Robert Shiller, who is typically a Wall Street apologist, in an interview on Bloomberg this past Tuesday: “The market is way over-priced,’’ he says. “It’s not as intellectual as people would think, or as economists would have you believe.” Shiller is noted for his warnings about the tech bubble in 1999 and the mid-2000’s housing bubble before it collapsed.

Extreme levels in consumer confidence, investor sentiment, valuations and a steep incline in stock prices have historically marked market peaks. A week ago Investor’s Intelligence bullish sentiment among investment advisors hit its highest level in 30 years. That previous peak corresponded to the market peak in 1987 (the 1987 stock crash was the steepest in history). Consumer confidence hit a 16-year high. The prior peak in consumer confidence occurred right before the tech bubble crashed in 2000.

As detailed in recent Short Seller Journals, the retail mom & pop investor has been piling into the market since the beginning of the year. When the realization that Trump’s campaign promises will never become reality and the “music stops” in the stop market, there will be a broad base of retail stock geniuses looking for seats that don’t exist.

The stock market is perhaps the most disconnected from the underlying fundamental systemic reality than at any time in history. This is true if we were to evaluate the total amount of debt as a percentage of GDP, which is about 345%. At the beginning of 2000, it was about 270%. If we were to adjust the current level of GAAP earnings for the S&P 500 using the GAAP standards applied in 2000, it’s likely that current p/e ratio for the SPX would be at least as high as it was in 2000. And recently it was revealed that retail traffic at malls across the country has fallen off a cliff (15% in February and another 13% so far in March). Used car prices are plunging, which reflects both an oversupply of used cars and a big fall-off in demand. This will quickly spill over into the new car market, which faces a record level of dealer inventory. And bank loan creation has begun to rip in reverse:

Bank loan creation is a product of both demand and supply. A drop of the magnitude shown above occurs because borrowers have stopped forming new businesses or expanding current businesses (except for real estate developers, who will borrow relentlessly until the banks cut them off) and banks have determined that, in the current economic environment, the risk of losing money from lending to businesses and consumers exceeds the potential return (real estate developers are finally getting cut off).

In short, based on the above fundamental data the economy for the most part has fallen off a cliff.

Extreme levels in consumer confidence, investor sentiment, valuations and a steep incline in stock prices have historically marked market peaks. A week ago Investor’s Intelligence bullish sentiment among investment advisors hit its highest level in 30 years. That previous peak corresponded to the market peak in 1987 (the 1987 stock crash was the steepest in history). Consumer confidence hit a 16-year high. The prior peak in consumer confidence occurred right before the tech bubble crashed in 2000.

Most of the above commentary is excerpted from the latest issue (released Sunday) of IRD’s Short Seller’s Journal.  The primary short idea presented is down  4.7% from last Friday’s close.  I just closed out a put position from an idea I presented (including the put otion I would be buying)  two weeks ago for an easy 30% gain.  If you are interested in learning how to make money shorting the most overvalued market in history, click here: Short Seller’s Journal subscription.

I have a feeling, in a few years people are going to be doing what they always do when the economy tanks. They will be blaming immigrants and poor people. – from “The Big Short”

Is Demand For Physical Gold Really Collapsing?

Seriously? “Simon Black” (it’s a nom de plume) wrote an article titled “Demand For Physical Is Collapsing.”  He focused on retail bullion demand numbers. The headline and the content is largely fake news as it focuses on the demand for minted coins vs the paper gold market. We’re not really sure about the intent of article, but the content was devoid of any relevance to the actual global demand for physical gold.

While the retail minted coin and small-size bar demand is down from last year’s levels, there’s two factors to explain this. First is price. The price of gold and silver was lower in early 2016 than it is now. The price of gold in February 2017 averaged $1230-$1240 while the price of gold a year ago February averaged $1175. Retail buyers of gold/silver coins are highly sensitive to price and tend to chase the price higher, up to a point. On this basis, it’s not surprising that more minted coins were sold a year ago compared to this year. This “price effect” on the demand for retail gold and silver coins likely explains about 25% of the demand comparison between 2016 and now.

The second factor is the economy. Remember, the end user of minted bullion products is largely the retail buyer.  In the first two months of 2017, real wages have declined. Even more negative for retail sales of any sort is the fact that real disposable income has been declining on a year over basis since December 2015:

While we at the Shadow of Truth do not consider buying and owning bullion to be “discretionary,” retail sales, including sales of bullion coins, is highly dependent on the relative level of real disposable income. Thus once again it should not surprise, based on just looking at retail demand for physical bullion, that retail bullion sales are falling.

On the other hand, the Black article purports the idea that retail bullion sales represents global demand for gold and silver. Nothing could be further from the truth. Retail demand at the margin has no affect on price other than maybe the price premiums in the coin market based on mint supply and retail demand.

The majority of gold bullion demand comes from the jewelry industry, eastern hemisphere Central Banks and sophisticated wealthy and institutional investors. India and China alone import more gold than is produced from mines globally. This is why Black’s “paper gold” price is rising. It’s why the BIS and western Central Banks have failed to eliminate the significance of gold in the global monetary system.

Gold imports into India jumped 175% in February from February 2016 to 96.4 tonnes (LINK). In fact, official gold imports into India have been rising since December.  And that does not include dore bars or smuggled gold.  179 tonnes of gold was withdrawn from the Shanghai Gold Exchange in February.  This is 60% higher than February 2016.  The Russian Central Bank gold reserves have been rising almost monthly since mid-2007.

To claim that the global demand for physical gold is collapsing is seeded in either ignorance or  mal-intent.  But either way, the assertion is outright idiotic when the facts are examined, which we do in today’s episode of the Shadow of Truth:

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Gold & Silver Soar After The Fed’s Clown Show

Stocks rally as the Fed once again shows how clueless they are at trying to manage the economy. – from @Stalingrad & Poorski

The Federal Reserve’s FOMC predictably nudged the Fed Funds rate up 25 basis points (one quarter of one percent) to set its “target” Fed Funds rate level at .75%-1%.   Nine of the faux-economists voted in favor of and one, Minneapolis Fed’s Neil Kashkari, voted against the meaningless rate hike.

Or is it meaningless?  Ex-Goldman Sachs banker Neil Kashkari was one of the Treasury’s Assistant Secretaries when the Government made the decision to bail out Wall Street’s biggest banks with nearly $1 trillion in taxpayer money.   It was also when the Fed dropped the Fed Funds rate from about 5% to near-zero percent.  Despite Yellen’s official stance that  the economy is expanding and the labor market is “tight” (with 37% of the working age population not considered part of the Labor Force – a little more than 94 million people) Kashkari voted against the tiny bump in interest rates.  This is likely because he is fully aware of risk to the banking system – perched catastrophically on hundreds of trillions in debt and derivatives – of moving interest rates higher.

The Fed’s goal is to “normalize” interest rates.  The financial media and Wall Street analysts embrace and discuss this idea of “normalized” interest rates but never define exactly what that means.  For the better part of the Fed’s existence, the “rule of thumb” was that long term rates (e.g. the 10-yr Treasury rate) should be about 3% above the rate of inflation.  And the Fed Funds rates should be equal to or slightly above the rate of inflation.

Using the Government’s highly rigged CPI index, it implies the Fed Funds rate would be “normalized” at approximately 2.7% and the 10-yr bond around 6% based on Wednesday’s CPI report.  Currently the Fed Funds rate is 3/4 – 1% and the 10-yr is 2.5%.  Of course, since the early 1970’s, the CPI calculation has been continuously reconstructed in order to hide the true rate of price inflation.  For instance, the current CPI index does not properly account for the rising cost of housing, education, healthcare and automobiles.

John Williams’ of Shadowstat.com  keeps track of price inflation using the methodology used by the Government to calculate the CPI in 1990 and 1980.  Using just the 1990 methodology, the rate of price inflation is 6.3%.  This would imply that a “normalized” Fed Funds rate would be around 6.5% and the 10-yr bond yield should be around 9.5%.    So much for this idea of “normalizing” interest rates.  Using the Government’s 1980 CPI methodology, Williams calculates that the stated CPI would be 10.3%.

Most of the hyperinflated money supply has been directed into stocks, bonds and real estate. But based on the cost of a basket of groceries, healthcare and housing alone, price inflation is accelerating.    If the Fed were to “normalize” interest rates at 6.3%, it would crash the financial and economic system.  In other words, the Fed is powerless to  use monetary policy in order to promote price stability, which is one of its mandates.

In today’s episode of the Shadow of Truth, we discuss the insanity that has gripped the markets as symbolized by the Federal Reserve’s FOMC meetings:

Can Valeant Go To Zero?

Valeant (VRX) stock is now at $10. After a brief, Roman Candle launch to $260, $10 is the level where it traded in early 2009. It may be one of the few stocks that has gone back its financial crisis trading level. It is now likely on a long, slow death march to zero.

It was reported that Bill Ackman has completely liquidated his Pershing Square hedge fund position in VRX.  Any institutional investment manager or pension fund who left its investment in Pershing Square long enough to see this happen should be investigated for breach of fiduciary duty.   Ackman’s fund reportedly lost over $4 billion in VRX.  I suspect that number was massaged to the low side for public consumption purposes.

I began to look at VRX with a fine-tooth comb just about 12 months ago.  On March 15, 2016, I wrote:  “The SEC Should Suspend VRX Trading: The Company Smells Like Enron.” The stock had dropped fro $260 to $37 in less than a year:

The initial triggers were concerns over the Valeant’s drug-pricing policies and questions surrounding its methodology for booking revenues. However, with just a casual “look under the hood” at VRX’s SEC-filed financials, there is likely a great deal of fraud lurking beneath what’s already been questioned. In fact, this is starting to smell a lot like Enron or Bear Stearns. The only component missing from this story is a CNBC rant from Cramer issuing a table-pounding buy on VRX stock. That may yet occur.

To begin with, the Company is carrying $30.2 billion in long term debt against just $9 billion of tangible assets. $39 billion of VRX’s assets is in the form of goodwill and intangibles. VRX’s self-assessed book value is $6.4 billion. But VRX’s tangible book value is negative $32.6 billion.

On March 18, 2016, I wrote: “Valeant (VRX): ‘Hope’ Is Not A Valid Investment Strategy,” after the stock had dropped another 28% from March 15th:

VRX will not default because the banks will grant as much leeway to VRX as is needed to keep the corpse alive. At this point in time, VRX’s assets likely are worth enough to cover the bank debt obligations. Just like a vampire would want to keep a body warm and the pulse ticking while sucking out the blood, the banks will hold up VRX in order to get as much money out as possible.

Of course, the longer this drags out, the uglier it will become for all economically interested parties. Because there’s accounting and disclosure fraud involved, we can expect the class-action shareholder lawsuits to pile up once the lawyers get a whiff of the blood being sucked out by the banks.Untitled

But keeping VRX alive for creditor purposes won’t help the stock. At this stage in the game, VRX stock will descend – sometimes quickly, sometimes slowly – below $10. In other words, VRX’s stock has entered the Irreversible Debt Spiral.

On April 5, 2016, I wrote: “Valeant (VRX): The Short Seller’s ATM Machine” after the stock popped up on news that an “internal review” showed that its books were clean. There’s that “hope” trade again:

The Company’s declaration that its financials are now valid is based on a review of the matter conducted by a committee that was composed of VRX’s board of directors. In no way can the case be made that this review was in any respect independent or “arm’s length.” This is another trait of a Company that is on the ropes: self-declared exoneration.

Without a doubt, the path of VRX’s stock to much lower stock prices will be littered with news-driven price-spikes like today. This is why VRX stock is a short-seller’s ATM. Every spike can be shorted for short-term profits. Make sure to hold on to some amount of a “core” position in order to profit from the next eventual new-driven waterfall. This is how similar stocks before VRX – like Enron, Bear Stearns, Countrywide FInancial, etc – traded until they finally dropped below $10.

Over the next few months I followed the VRX drama including its attempted asset sales. The Company was unloading “core” businesses for a fraction of the price it had paid for them over the previous few years. To this day I can not understand how:  1) Ackman continued to throw good money after bad in an attempt to prop up a house of cards and 2) how Ackman’s investors allowed him to continue throwing good money after bad. It only took one detailed review of VRX’s business history and 10-K to see that VRX was quite similar to Enron.

The Valeant saga is emblematic of the entire U.S. political, economic and financial system. The entire system is enveloped by the criminality of the people and entities running it – a criminality cloaked in catastrophically unpayable debt and now blatant fraud. It was a similar environment in this country when Enron imploded and those of us who understood what was happening had hoped that Enron would be the warning signal to everyone that would inspire the badly needed reform. Unfortunately, Greenspan inflated an even bigger fraudulent asset bubble than the one he had previously inflated that had led to Enron. You know the rest of the story from there.

Now our system is beset with a monetary and debt bubble that has inflated all asset classes beyond any conceivably recognizable “intrinsic” value. The Valeants and Enrons were fair warning and no one listened. The next collapse is going to dwarf the implosion of the two asset bubbles that preceded it. Fortunately, for those who are willing to “see” and accept this inevitable fate, gold and silver (precious metals) is the one asset class that has been fraudulently held down well below their intrinsic value.

If you are still holding on to some Valeant stock, let go of that insanely irrational “hope,” sell your shares and use the money to buy some gold and silver.

Bank Loans Take A Dive: It’s The Economy, Stupid

I am compelled to correct a report posted on Zerohedge about the cliff-dive going on in commercial, industrial and consumer loans.  The report in ZH suggested the plunge is connected to two possibilities:  1)  this one from a Wall Street sleazebag from Barclays: “it is possible that companies have shifted from the loan to the bond market, and are selling more bonds to lock in cheap financing before rates rise, while not encumbering assets with issuing unsecured debt;” and 2) political uncertainty connected to Trump.

The first possibility could have some small amount of legitimacy except that if you parse through all the data available at the Fed, you’ll see that bank credit has plunged across the entire spectrum of U.S. business (I used size of loan as the proxy). Smaller businesses do not have access to public credit markets and thus the first explanation is the typical apology for a negative economic report that we would expect from a Wall Street con-artist. The second possibility is part of the anti-Trump narrative found in the fake news reports coming from the ignorant.

“It’s The Economy, Stupid”

That quote was created by James Carville as one of Bill Clinton’s campaign slogans in 1992. Those words ring even truer today. A primary example is the restaurant industry numbers discussed above. “Hope” and “confidence” do not generate economic activity. And “hope” is not a valid investment strategy. A better guide to what’s happening to economic activity on Main Street is to see what banks are doing with their lending capital. I borrowed the two graphs below from the @DonDraperClone Twitter feed (click to enlarge):

Commercial bank lending is a great barometer of economic activity. The top graph above shows the year over year percentage change in commercial and industrial loans for all commercial banks. You can see that the rate of bank lending to businesses is falling doing a cliff-dive. These are primarily senior secured and revolving credit loans that sit at the top of the capital structure. If bank lending is slowing down like this, it means two things: 1) the ability of businesses to repay new loans is declining and 2) the asset values used to secure new loans will likely decline. In fact, it is highly probable that the tightening of credit by the banks is a directive from the Fed. Yes, the Fed.  Despite its public commentary suggesting otherwise,  the Fed knows as well as anyone that the economy is tanking.  This is why the Fed can’t hike rates up to a level that would bring real interest rates up to at a “neutral” level (using a real price inflation measure, Fed Funds needs to be reset to at least 6%, and likely higher, to get the real rate of interest up to zero).

The only reason the Fed might “nudge” interest rates higher next week is for credibility purposes. Everyone knows inflation is escalating, which makes it difficult for the Fed to keep interest rates so close to zero. In addition, a rate hike now, even though it will be insignificant in magnitude, will give the Fed room to take rates back to zero when the public and Congress begin to scream about economy.

The second graph shows the year over year percentage change in auto loans. The implications there are fairly self-explanatory. Auto sales are slowing down because the “universe” of potential prime and subprime rated car buyers, new and used cars, has been largely exhausted. In fact, with the default rate on subprime auto loans beginning to hit double-digits, the next phase in the automobile credit market will likely be credit implosion crisis.

The above commentary was an excerpt from the latest issue of the Short Seller’s Journal.

What Will Catch The Falling Housing Market Knife This Time?

“There’s so much inventory, and that influx is hitting across all price points, even studios.” – director of leasing at Douglas Elliman (NYC). NYC was one of the first markets hit hard in 2007-2008.

For awhile, any weakness in the NYC housing market was attributed exclusively to the high end. I am on record stating that price dynamic would spread to all price segments. It’s not rocket-science, it’s simple supply/demand/price economics. Studio rents in NYC dropped the most on record in February. This same dynamic is also beginning to happen in many of the other hottest cities across the country. To compound the spreading price weakness in the rental market, a record number of new units will hit the markets coast to coast over the next two years. It would be a mistake to assume that price weakness in the apartment market will not affect the home rental market. Again, the laws of supply, demand, price, income and substitution will once again invade the entire housing market and take sales volume and prices lower.

Eventually the housing market implosion that occurred in 2008 will repeat, only this time it will likely be worse. Why? Because the institutional money that soaked up most of the foreclosed inventory are either fully invested in the asset class or outright selling down their buy-to-rent portfolios. Where will the money come from to catch the falling housing knife again?

Interest rates were dropped from 5% in 2008 to zero percent. This created a reservoir of cheap capital with which to fund new homebuyers with marginal credit. The cheap money and reduced requirements to qualify for a Government-backed mortgage (FHA, FNM, FRE) transformed a subprime borrower in 2008 into a prime/conventional buyer by 2015. While it may not look exactly like the junk mortgages issued by the likes of Countrywide et al during the big housing bubble, most of the low-to-no-to-borrowed down payment agency mortgages issued to the average homebuyer look quite similar in terms of absolute debt to income and income to monthly payment ratios. Just like more than 50% of American households are unable to write a $500 emergency payment check, many of the new homeowners in the last 2-3 years are living on the edge of defaulting on either their car payment, their mortgage payment or both.

A fairly large proportion of the home “buyers” over the last couple of years have been mom and pop speculators looking to “get in” on flipping or buying and renting. A large percentage of that cohort has been using debt to finance their flips/investments. When the music stops, many of these buyers will be left without a buyer or renter. Again, this is similar to the dynamic that unfolded in the housing market leading up to the 2008 collapse.

The above analysis is an excerpt from the latest Short Seller’s Journal, released earlier today.  There’s a lot more information and analysis, most of it not found in your primary alternative media websites or in the mainstream media.  The issue also has two primary short ideas and a couple other ongoing short trades highlighted plus ideas for using options.  SSJ is a weekly, email-delivery based subscription service.  Subscribers also have the option of subscribing to the Mining Stock Journal for half-price.  To learn more, click here:   Short Seller’s Journal

Gold And Silver: Legal Weapons Against The Deep State

  • Question:  Why do Central Banks and Governments hate gold?
  • Answer:  Because they can’t print it

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”  – Alan Greenspan, “Gold and Economic Freedom”

Just like everything else in the western financial system, the paper trading markets are leveraged beyond redemption.   The amount of paper “claims” on actual physical gold was estimated to be 100:1 in 2010.   We can assure you that ratio is much higher now.  On the Comex alone, for instance, if more than 9% of the  April open interest in gold futures were to stand for delivery – based on the currently declared 1.4 million ounces of gold reported as being “available for delivery” (registered) – the Comex would default.  The entire open interest in gold futures is 60x greater than the amount of gold available for delivery.

This is just the publicly traded paper gold derivatives.  There’s also the shady world of OTC gold derivatives.  We have no idea what kind of leverage is embedded in these contracts.  But the total notional amount of OTC “precious metals” derivatives according to the OCC’s latest quarterly report on OTC derivatives (Office of the Comptroller of the Currency) is over $28 billion.  Just to highlight the degree to which the Government goes in order to hide the facts about the gold and silver market, the OCC used to break out OTC precious metals derivatives into the categories of “gold” and “silver and other.”  Now the OCC  reports just “precious metals.”  What is it that the Government and banks are hiding?

The amount of leverage embedded in a Comex futures contract, based on the current amount of margin required, is about 25:1.  There’s no telling how much leverage is embedded in the OTC derivatives agreements.  All we know is that the disclosure requirements are becoming increasingly more opaque.

Silver futures began trading on the CBOT in 1969.   But gold futures were not around until 1974, three years after the U.S. closed the gold window, completely disconnecting the dollar from gold.   Gold futures were developed to enable the Fed and the U.S. Treasury to control the price of gold as a means of reinforcing the legitimacy of the dollar as a fiat currency used as the world’s reserve currency.

While the price of gold has been heavily manipulated since at least the 1960’s, when the U.S. was running out of enough gold to fulfill its obligations under Bretton Woods, the manipulation and “shock and awe” price attacks are used as a form of propaganda that is designed to discourage investors from converting fiat dollars into gold and silver.  It’s a powerful weapon used by the Deep State against gold and economic freedom.

In today’s episode of the Shadow of Truth we discuss the manipulation of gold and silver and how it’s used by the Deep State to increase the Government’s control over the population:

ADP’s Job “Creation” Report Is A Fraud

Put it on CNN and it’s “true.”  Americans will turn on their tv’s and open their newspapers tomorrow (the small percentage that still read newspapers) to hear and read that the U.S. economy “created” nearly 300,000 jobs in February – at least according to ADP. .

The easiest way to hold ADP accountable and eviscerate the credibility of their report is to examine their “methodology.”  Of course, this requires searching the ADP website to find the area way at the bottom where it describes its “methodology,” something no fake news reporter or analyst has to time with which to bother.

As ADP describes in its “methodology” section, it seeks to “closely align” the final output of its calculations with that of the “final print of the U.S. Bureau of Labor Statistics (BLS) numbers.”  Thus,  ADP’s “job creation” report is really nothing more than a regurgitation of the fraudulent employment report issued by the U.S. Government.

Here’s the other variables of input that the new ADP methodology now incorporates into its methodology used in ADP’s  “enhanced  ADP National Employment Report

  • ADP matched-pair growth rates by industry
  • Lagged values of BLS estimates of growth of employment by industry with industry specific restrictions
  •  Unemployment Insurance Claims (UNI_US)
  •  Oil Prices
  •  The Michigan Consumer Sentiment Index (CSENT_US)
  •  The Composite Index of Leading Indicators (LEAD_US)

The “soft” data reports above have nothing do with job creation.  Unemployment claims are historically low because the labor force participation rate is historically low, which means that the number of people who are terminated and can file for nemployment benefits is historically low.  How is this variable an input on job creation?

WELCOME TO ADP’S RABBIT HOLE

Since when did the manipulated price direction of oil create jobs?  Consumer confidence creates jobs?  Please.  In fact, ALL of the variables listed above and used by ADP in formulating its job creation report are highly manipulated and in no way represent the process by which jobs are created – other than the growth in propaganda creation positions at the Government and at the mainstream media outlets.

But there’s more.  ADP claims that 106,000 jobs were created in February in the “goods producing sector.”  The primary goods producing sector in the U.S. is the auto industry, which is currently cutting jobs in order to cut production in the face of record auto inventory sitting on dealer lots.  In fact, GM announced 1,100 job cuts at one of its production facilities yesterday.

ADP also claims that 66,000 jobs were “created” in construction. But we know based on the Government’s construction spending report that the Government alone cut construction spending by nearly 8% last month.  Most major cities around the U.S. now have years of apartment inventory.  For instance, San Francisco now has 5 years of vacant supply:  LINK.   Commercial real estate occupancy rates are soaring with the number of retailers filing bankruptcy and closing stores.  At least 7 major retailers this year have filed chapter 11 or are in the process of trying to restructure debt.  This is a major source of job loss and it’s simply not credible that commercial construction is on the rise, which means that the 66,000 “new” jobs attributed to construction is a complete fraud.

Leisure and hospitality is credited with producing 40,000 new jobs in February.  I’d love to sit down with the ADP analyst to find out where this number came from.  The restaurant industry experienced revenue declines nearly every month in 2016.  Same-store-sales and foot traffic plunged across the industry.  It’s inconceivable that the leisure and hospitality industry produced this many jobs, if any at all, given the underlying fundamental condition of the median average household, which has been experiencing declining real disposable income for several years now

The report also gives credit to small businesses for “creating” 104,000 jobs.  This is  not even remotely credible.  A report out just a couple months ago stated that the creation of new businesses in the U.S. is at a 40-year low:  LINK.  Does anyone really believe that Trump’s “hopium” effect suddenly inspired a rush to start new businesses which then hired 104,000 people?

There’s several more inconsistencies in ADP’s report. I’ll leave it to the reader to sort through the actual report itself and decide what’s real and what’s fraudulent.  As far as I can tell, the ADP report has been designed to piggy-back and “confirm” the fraudulent employment issued by the Government every month.

 

Big Brother In America Is The Media

Journalism and a free, open media is another “check and balance on the three branches of Government and we don’t have that check and balance anymore.” – Shadow of Truth

One of the hallmarks of a totalitarian political regime is control of the media. In 1996 president Bill Clinton signed into law the Telecommunications Act of 1996. This law, which was bought and paid for by corporate media lobbies, allowed big corporations to acquire and consolidate media outlets nationwide.

The 1996 law lifted the limit on the number of television and radio stations any one corporation could own. In 2003, the FCC voted to lift the ban on cross-ownership of newspapers and full-power broadcast stations that serviced the same community. This was the final nail in the coffin of free and competitive media and news-reporting in the U.S.

The 1996 Clinton law followed by the lifting of the cross-ownership ban enabled Corporate America to increase their monopoly on the flow of information in the U.S. and around the world. Now six corporations control well over 90% of all media in the U.S.: NewsCorp, Disney, Viacom, Time Warner, CBS and Comcast.

“Wall Street slips on and geopolitical worries” (Reuters headline).   What does the Trump/Obama wiretapping squabble have to do with whether the stock market goes up or down? It has nothing to do with whether or not corporations can produce goods and services profitably. Too be sure the accusation of wiretapping and the possibility that the accusation is accurate is troublesome in and of itself.  But it has nothing to do with the fact that the stock market is currently the most overvalued in U.S. history.

The headlines, however  reflect the degree to which all media reporting in the U.S. is now under the control of Corporate America – a Corporate America that has assumed control of the political process and has become Orwell’s  Big Brother .

Most people associate the term “fascism” with an authoritarian and nationalistic political system. But it’s much more than that. Mussolini described “fascism” as the merger between Corporations and Government. The political system in the U.S. can easily be considered “fascist,” as Corporate America and Wall Street have used billions of dollars to take over the entire political process including all of the mainstream outlets of communication and news reporting.

The result is directly reflected in the nature of the 2016 presidential and congressional elections. The content of any news reporting is now a product of the material fed through the broadcast and print communication outlets controlled by six corporate monoliths and the Too Big To Fail banks that finance the system.

A good friend and colleague of the Shadow of Truth, John Titus, once quipped with regard to the public’s consumption and acceptance of anything reported as news, “put it on CNN and it’s true.” This statement succinctly summarizes the propaganda which supports the process by which the Government seeks to control the views and perceptions of the public at large.  In today’s Shadow of Truth podcast, we toss around that fact that the United States has become a Goebellsian “playground” and George Orwell’s nightmare: