The Coming Collapse Part 3

There is so much smoke being blown up our rear ends right now it is hard to know where to start. Today I thought we would take a look at how the government and business are distorting some numbers to make it look like we are all living in lollypop land.

This is from the Wall Street Journal this morning:

Jobless Claims Decline in Latest Week

http://online.wsj.com/article/SB125742744080829139.html

The number of U.S. workers filing new claims for jobless benefits declined more than economists expected last week, the U.S. Labor Department said in its weekly report Thursday.
Total claims lasting more than one week, meanwhile, also decreased.
Separately, U.S. productivity grew during the third quarter by the most in six years as the economy recovered from severe recession and employers kept firing workers to save money.
Initial claims for jobless benefits decreased by 20,000 to 512,000 in the week ended Oct. 31. That is the lowest level since Jan. 3. The previous week's level was revised to 532,000.

Now lets look at what this really says. The first paragraph means nothing, it is all feel good. The second line makes no sense – claims lasting more than one week also decreased – that would mean everyone is finding new jobs within one week of filing a claim, and that clearly isn't the case,

The next paragraph contradicts all logic. Productivity grew while employers continue to fire workers to save money. How does productivity grow when you are eliminating your work force?

And the last line has the most BS in it. Claims dropped by 20,000, revising the level to 532,000. That number will be revised back up again in a few days, although it won't make any headlines. And that is because they always drop 250,000 off the top because of the government birth / death business index. This is where the government arbitrarily makes decides that 250,000 new jobs are created every month. This has absolutely no basis in reality, yet it is how they manipulate their statistics.

Another thing that baffles me is how 500,000 new claims are filed every week, yet at the end on the month their new jobless totals are only 500,000 higher than the month before. Somewhere 1,5 million people disappear under the government accounting system each month.

My point is you cannot believe the government numbers, they are playing with them to try to hide how mess up everything really is. True unemployment is over 20% nationally right now, and has been for a few months.


A Record 36 Million in U.S. on Food Stamps

http://www.newsmax.com/newsfront/food_stamps_record/2009/11/04/281668.html

That doesn't look like things are turning around.

Caterpillar, Microsoft, and a host of other large companies are now laying off even more folks. Yet productivity has increased?

There has been a lot of hoopla about companies beating expectations and things are turning around. They tout an increase of sales over year to year. Ford just did this. And I like Ford. But there is more to this than meets the eye.

First, most of these companies that have just turned around and are in happy days, have laid off large parts of their workforce, closed offices and plants, and reduced production. All of these things cut down overhead.

Next you get into the accounting. Assets are not being depreciated on the books, debt is not being counted as liabilities, things are being moved around to make the books look good. This is pretty much what ENRON did before their demise. All the banks that received TARP money have also done this. They still have all those toxic assets, they just moved them to a set of books that are no longer used in the profit / loss reports. This has disaster written all over it. Yet it is being sanctioned by our government. So it is easy to show year over year profits when you've cut your overhead and move your debt off the balance sheets. It is like you decided not to account for your house payment in your monthly budget, suddenly on paper you have a lot more money to spend. But in reality, nothing has changed in your budget.

This week India saw the writing on the wall, and dumped their US dollars and bought gold, driving the gold price to a new all time high. We already talked about the monkey business in the gold markets. But one thing this move did was drive the dollar down even further. Which is not good news for us.

So what have we learned so far?
The gold markets seem to be rampant with fraud, une is much higher than we are being told, companies are fiddling with their books to look happy, and the commercial real estate market is quietly imploding around us.

California is so messed up they did something that is probably Unconstitutional this week. After being told over and over again by the voters that they do not want any more taxes, and we want them to get their spending and budget under control, the state took a more inventive route.

They have added a temporary 10% income tax on all it's residents. No tax is ever temporary. The gas tax was temporary back on the 1950's, and it has only grown since then.

The State figures this tax will get them out of the whole they dug. But as we have seen, there is never enough money for government. Several months ago they did all their little accounting tricks to try to balance the state budget. It only took 10 weeks for that to implode on them, and three weeks for them to come up with this new emergency plan.

Unemployment in the sunshine State is up there at the top of the charts. Over taxation to fund feel good polices have driven out many a business, causing the high unemployment rate, which in turn created a tax revenue crises for the state. Their solution, stick it to folks that still have a job, and do it right before the holidays. I don;t think you have to be a rocket scientist to understand how this will hurt the already faltered economy.

Holiday sales are already expected to be dismal. Take away 10 % gross of an entire states income, and expect sales to be ever more dismal. This is going to affect the sales tax revenue they have already projected they will have, and factored into the sate budget. And that my friends, will lead to another revenue crises in just a few short months.

Dismal sales will lead to even more companies that are just barely clinging to life to die by the beginning of next year. This will increase the unemployment rate. In turn, will put more homes into foreclosure, and more commercial real estate up for auction. Which leads back to less tax revenue for the state. Cause and effect, something our government seems to have forgotten about.

The really spooke thing is, what happens in California, works it's way across the country. I would expect to see other states take this insane and desperate move, and quite possibly the Federal Government to do it as well soon.

Frankly, the only reason we don't have the soup line and people selling apples in the streets right now like we did in the 1930's, is because of the programs FDR put into place. Namely Social Security, unemployment benefits, food stamps, and the welfare system.

Meanwhile two of the largest Federal Government spending programs are going full steam ahead, Cap and Trade, and the Health Care debacle. The Federal Government is now at 100 TRILLION Dollars in debt. They use the same accounting tricks that the banks are now using. It is not a pretty picture.

The only reason our Dollar is worth anything right now, is pure faith. Faith that the rest of the world is quickly losing. India proved that this week. China has been dumping Dollars since the beginning of the year. All I can say is try to be prepared, because like every house of cards, it will all be tumbling down soon.