US Economic Statistics Point To Future Trouble

Japan, nervous that the US might notice that Japan is playing footsie with the BRIC consortium, rushes to reassure the US, they love buying our debts and keeping us in economic chains tied to Japan. Whoopee!  Aren’t we fortunate?  Japan’s economy is beginning to improve thanks to the flood of US deficit spending.  Will Japan buy up all this debt?  Well, they can’t, they need the other members in the J-BRIC organization to keep the US afloat.

Aren’t we lucky?  Japan will buy another trillion US debt!

Yosano Says Japan’s Trust in Treasuries ‘Unshakable’ (Update1) – Bloomberg.com

Japanese Finance Minister Kaoru Yosano said his government is confident about the outlook for U.S. Treasuries, signaling the second-biggest foreign holder of the securities will keep buying them amid record sales.

Pooh on Bloomberg!  Would it be all that hard to note that CHINA is the #1 buyer?  The record sales are due to our trade rivals coming to a joint decision to keep the US afloat while they reorganize the New World Order and take over the IMF.

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Yosano, 70, said in an interview in Tokyo on June 10 before attending a Group of Eight meeting of finance ministers starting today in Italy. “So our trust in U.S. Treasuries is absolutely unshakable.”

The dollar is still unacceptably weak for Japan.  They want it to not be 97 yen to the dollar like it is right now, they want it to be at least 120 yen to the dollar.  The purchase of more Treasuries is aimed at creating this situation.

The U.S. government has come under fire from some creditors as spending to prop up its economy is projected to quadruple its budget deficit to $1.85 trillion in the year ending Sept. 30. China and Russia, the largest and third-largest single holders of the debt, have said they may reduce their reliance on dollar- denominated assets, fueling a surge in Treasury yields to a seven-month high.

“Japan is, of course, mindful that selling Treasuries will cause the yen to strengthen and that would hurt corporate profits,” said Chotaro Morita, chief strategist in Tokyo at Barclays Capital Japan Ltd. in Tokyo. “Even with their strong ties, it’s possible Japan would consider selling U.S. Treasuries should the dollar say, halve in value.”

This last paragraph is very important!  This is a warning: if the dollar drops below 60 yen to the dollar, Japan will dump everything and cease doing business with the US.  The possibility of this happening is not zero.  It is also not absolute. But every year, it gets more and more probable.

Probabilities are a way of thinking which is hard for people to do.  As events slip past us, the probability factors shift over time.  For example, the probabilities that the San Andreas Fault will jump more than 23 feet in one second is rising every day.  As each day goes by, the probability of this happening in the next minute relentlessly rises until it is very, very likely in the very, very near future.

The bankruptcy of the US is also rising each day.  Even as everyone tries to avoid this event, the fact is, nothing has changed at all, the stresses are still piling up more and more and we know that eventually, the event horizon will merge with the timeline and the event will happen.  The fact that the Japanese Finance Minister has to reassure the US is another warning sign that we are rapidly approaching the point in time when the whole system will shatter.

China’s new bank loans rise to 664.5 bln yuan in May

China’s new yuan-denominated loans stood at 664.5 billion yuan (about 97.29 billion U.S. dollars) in May, the People’s Bank of China said here Friday.

China is a creditor nation that is using credit, not loans from Japan, to restart their own economy.  This is an immensely important distinction!  The US disregards this at our own peril.  All these events dovetail.  We live in a global world and it is under tremendous stress just like the San Andreas Fault in California.    I see all over the web, stories about how bad things are in China.  Things are bad everywhere!  But relativity tells us, some places are worse than others!  And when we look for weaknesses, we look at who is deepest in debt.  History tells us, industrial powers who are also creditor nations come out on top after a Great Depression.  Let’s visit the official Chinese news:

Spokesman: Russia-China coordination model stands test of time_English_Xinhua

Russia and China have established anew coordination model, which stands the test of time, ensures the smooth development of bilateral cooperation and helps them resolve complex problems in a constructive way, a spokesman for the Russian Foreign Ministry said on Thursday.

Oct. 2, 2009 marks the 60th anniversary of the establishment of diplomatic relations between Russia and China, and the 60th anniversary of the People’s Republic of China falls on Oct. 1, Andrei Nesterenko told Xinhua at a news conference….

The Russian Language Year in China in 2009 and the Chinese Language Year in Russia in 2010 are the extension of the reciprocal national theme years in 2006 and 2007, he said.

Ministry: China vows to find jobs for 80% of college graduates by end of August_English_Xinhua

The statement came as the country is still under tremendous pressure to find jobs for 6.1 million college students graduating this summer, while one million from last year are still looking for jobs.

The ministry said early this month that only about 45 percent of this year’s college graduates, or 2.75 million, had signed contracts with employers. The proportion is three percentage points lower than a year ago.

That means the ministry had to find jobs for another 2.13 million college graduates over the next three months.

Wow.  Millions of Chinese graduates have no jobs!  And this is a big, big problem, all problems concerning jobs and population things in China is, by definition, immense.  Will the Chinese succeed in keeping tranquility by keeping the intelligentsia employed?  We shall see.  In the US, this is a worse problem because of general trends pointing downwards, as I shall prove with graphs and statistics, as usual.

Recent college graduates finding entry-level jobs hard to get and hard to keep – Cleveland & Ohio Unemployment Stories | Help Wanted – cleveland.com

Not only are recent graduates competing against each other for fewer jobs, but they’re also up against more-experienced workers who graduated a few years before them and are back in the job market, said Heidi Schierholtz, an economist with the Economic Policy Institute, a nonprofit research organization in Washington, D.C.

“Young workers are getting slammed,” she said. “They are really seeing the brunt of this because employers, when push comes to shove, are shedding their less experienced workers first.”

Schierholtz said there are around five unemployed workers for every opening, so each job is a coveted prize. Employers can now be pickier about minimum requirements. A company that might have considered hiring a graduate in the past now might instead hire someone with five years’ experience because that person is willing to work for the same salary, she said.

Salaries are dropping even as inflation continues, as I will show below.  This is a very toxic combination.  The Chinese youth are very activist. For example, the communist leaders want to have all computers have this ‘firewall’ which keeps out the websites young people like.  I expect riots over this issue.  Already, hackers are threatening to undo this in various ways and I have little doubt, they will succeed.  As it stands, China’s government is already being forced down over this issue.

Household Wealth in U.S. Decreased by $1.3 Trillion (Update1) – Bloomberg.com

U.S. household wealth fell in the first quarter by $1.3 trillion, extending the biggest slump on record, as home and stock prices dropped.

Net worth for households and non-profit groups decreased to $50.4 trillion, the lowest level since 2004, from $51.7 trillion in the fourth quarter, according to the Federal Reserve’s Flow of Funds report today. The government began keeping quarterly records in 1952.

Americans are cutting back on spending as unemployment surges, home prices continue to drop and wealth evaporates, signaling any economic recovery will be slow to develop. The drop in net worth is one reason Americans are boostingsavings, blunting the effect of the tax breaks and income supplements from the Obama administration’s stimulus plan.

Obama can’t stimulate things because this is like whipping a dead horse so it can pull the global free trade economic wagon a few more miles towards the hell of US bankruptcy.  Instead of analyzing this matter sanely, everyone is trying the exact same things that seemed to work in the past. But did they work?

I would suggest, NOT AT ALL.  Trends continue to move in the wrong direction at nearly every level.  The Federal Reserve actually has graphs and charts, showing this process.  All Summers and Geithner need to do is take the graphs below and show them to Obama and explain, we have to battle very powerful forces to regain national economic health.  And this means, killing free trade and the fiat floating currency regime.

ALFRED: ALFRED Graph

This graph is frightful.  This is the length of time we need to get a new job when laid off during recessions or other hazards.  The length of time was less than 5 weeks even in downturns during the Vietnam War years.  Then, Nixon had wage/price controls and dropped the gold standard totally.  Oil took off and we had two bouts of hyperinflation.

There were two surges where the length jumped first to nearly 10 weeks and then a huge spike to 12 weeks during the Iran/Iraq war’s high oil prices coupled with terrible inflation in the US.  Since then, inflation has fallen and fallen to seemingly zero. But look at the length people are unemployed!  It briefly dropped to the 5 week level and since then, has been greater and greater DURING BOOMS.

The unemployment period began to average at being between 5-10 weeks with the majority of the time at over 7.5 weeks instead of averaging at less than 5 weeks.  Then, it has become much worse since 2000: it now averages at 10 weeks with a really big spike this year!  This is very bad news, overall.  Let’s compare this to energy inflation, first:

ALFRED: ALFRED Graph

Since 1980, when we had the first spike in longer unemployment periods, energy jumped in price.  Then, it had a steady period where a steady debasing of the the currency brought ‘normalcy’.  But starting in 2000, the oil wars of the US has caused inflation to pick up speed.  We have a small dip right now but anyone buying gas can see the price has begun to climb despite a very severe global recession.

ALFRED: ALFRED Graph

Oil goes up and up while interest rates fall.  Now, at zero.  But this is like an inverse of the employment graph above!  As unemployment stints grow longer, interest rates are dropping.  So, I will assume, lower rates will not create better job statistics since it hasn’t, in the past!  Now, look at the food price inflation index!

ALFRED: ALFRED Graph

HOCKEY STICK TIME!!!  Yes, this is a dire hockey stick graph.  Food cost the same from WWI to WWII.  Then, it rose a tad and stayed there for another 25 years.  Then, with the end of the gold standard, the beginning of the floating fiat currency, food absolutely takes off, like a rocket!  This is pure inflation!  And unlike the oil graph, it is not going down right now.  I just went shopping for two people and just one week of food and spent $100.  This is madness.    Below is the M3 graphs that are now discontinued:

ALFRED: ALFRED Graph

This graph stops at $11 billion.  We know it is well over $14 billion and climbing rapidly.  This isn’t nearly as nasty as the food graph!  But it is nasty, nonetheless.  The J-BRIC nations read these graphs, they track these numbers closely and unlike Summers, Geithner and Obama, not to mention the Bush gang, the J-BRIC gang understands very clearly, what these graphs mean in the future and know where we are going: to hell.

BUT NOT YET.  They want us around a while longer.

2009/06/12 10:55 – May Terms Of Trade Index Logs Record Improvement

TOKYO (NQN)–The terms of trade index for Japan’s manufacturing sector (2000=100) climbed 6.8 points from the previous year to 89.5 in May, marking the biggest improvement since the statistics began to be compiled under the current method in 1990, according to data released Friday by the Bank of Japan.

The upturn is attributed to a fall in prices of raw materials, including crude oil, compared with the previous year.

The index increased 0.3 point from April, marking the second straight month of expansion, due to a decline in domestic electricity fees.

Japan is pulling back out of the vortex.  We are not.  We are borrowing our way out of the vortex which is stupid. But Japan is building its way, using its creditor powers, to resume taking over global manufacturing systems.  Except China is planning on doing this and eventually, they will be in conflict.

BlackRock to Buy Barclays Global Fund Unit for $13.5 Billion

BlackRock Inc., started 21 years ago in a one-room office by former mortgage-bond trader Laurence Fink, agreed to buy Barclays Plc’s investment unit for $13.5 billion to become the world’s largest money manager.

BlackRock will pay $6.6 billion in cash and the rest in stock for Barclays Global Investors, the New York-based company said today in a statement. Financing for the transaction will include $2.8 billion from the sale of equity to institutional investors and $2 billion in loans from Barclays and other banks….

THEY ARE NOT USING CAPITAL, THEY ARE USING DEBT.

The purchase, the biggest of a fund manager, creates a company overseeing $2.7 trillion in assets, more than the Federal Reserve. BlackRock will add about $1 trillion in investments that track market indexes, which are attracting clients at the expense of funds whose managers choose securities to buy and sell. It’s the first top-ranked firm to attempt to combine both types of businesses.

This is pure insanity!  Blackrock is part of the Derivatives Beast as well as part of the mess we bailed out last fall.  And what are these gnomes doing? They are borrowing immense funds so they can ‘control’ them!  And history tells us, this stinks.  It absolutely stinks. We know this ‘control’ will continue to screw up everything.  For not one law  has been passed to stop the madcap consolidation of power via DEBT PILES!  ‘Good times’ is all about creating vast seas of ‘leverage’ so these gnomes with no capital can buy up all sorts of businesses and dump debts on them!

And note that this gnome operation is now bigger than the Federal Reserve.  I recall, talk about ‘too big to fail’.  This is way too big.  Period. They must be stopped.

Lobbyists Spend Millions Fighting Over Obama’s Universal Health Care Plan – Political News – FOXNews.com

The most lucrative job in Washington these days just might be health care lobbyist — as prominent interest groups announce plans to pour millions of dollars into fighting over President Obama’s efforts to create a universal health care system. The White House has sought to curtail the role of lobbyists, but the heated public debate over Obama’s health plan has made them very much a part of the legislative process. The five largest private insurers and the trade group America’s Health Insurance Plans spent a total of $6.4 million in the first quarter, an increase of more than $1 million from the same quarter last year. The industry is working to counter proposals endorsed by the White House that would offer a government health insurance option for millions of Americans.

All of our trade rivals have nationalized healthcare systems and using this, can outbid and undercut US industries.  And thanks to rampant corruption in Congress, this won’t change.  We will continue to protect vile hedge funds that borrow money so they can dump loans on top of all businesses on this planet while we spend a fortune to live shorter lives than European or Japanese people.  Talk about dumb.

Email:

emeinel@fairpoint.net

MAILING ADDRESS:

EMS NEWS

P.O. BOX 483

BERLIN, NY 12022

Make checks out to ‘Elaine Supkis’

CLICK HERE TO DONATE TO THIS WEBSITE