The Truth Behind Friday’s Job Report Shocker

On Friday, the Labor Department released a shockingly weak March jobs report. The feds and their cronies on  Wall Street spent the weekend trying to put a bag over its head.

Former Pimco CEO and Bloomberg  columnist Mohamed El-Erian gave this quick reaction:

The US employment machine notably  lost momentum in March, with just 126,000 new jobs added — far fewer than the  consensus expectation of around 250,000 — and with revisions erasing 69,000  from the previous two months’ total, according to the Labor Department. The  lackluster result ends an impressive 12-month run of job gains in excess of  200,000.

Yes, the employment numbers were  ugly. They confirm the other evidence coming in from hill and dale, industry  and commerce, households and homesteads all across the nation, and all the  ships at sea: This is no ordinary recovery.

Nip and tuck
In fact, it’s no recovery at all. It is strange and  unnatural, like the victim of a quack plastic surgeon.

But the damage was not an accident. No slip of the  hand or equipment malfunction produced this horror. It was the result of  economic grifters plying a fraudulent trade.

The Dow rose 118 points in Monday’s trading.  A 0.7% increase, this was neither the result of honest investing nor any  serious assessment of the economic future. Bloomberg attributed it to scammery  from the Fed:

New York Fed President William Dudley said the pace of rate  increases is likely to be “shallow” once the Fed starts to tighten.

His comments were the first from the inner core of the Fed’s  leadership since a government report showed payrolls expanded less than  forecast in March.

While data signaling rates near zero for longer have previously  been welcomed by American equity investors, concern is building that economic  weakness will worsen the outlook for corporate profits.

Get it?

‘Shallow’ rate  increases. Translation: Savers will get nothing for their forbearance and  discipline for a long, long time.

Instead, the  money that should be rightfully theirs will be transferred to the rich…and to  gamblers and speculators…as it has for the last six years.

A Frankenstein economy
Back to El-Erian  who, having seen the evidence of this botched operation, then goes goofy on us.  He calls upon the authorities to ‘do something’.

As if they hadn’t  done enough already!

The feds were the  ones who injected the credit silicon, hardened the upper lip and created the  Monster of 2008.

And then, when  the nearest of kin started retching into the hospital wastebaskets, they went  back to work. Now, the economy is more grotesque than ever.

But here’s  El-Erian, asking for more:

‘The  report is a further reminder of how much more the US economy could — and should  — achieve if it weren’t for political dysfunction in Washington and a “do  little” Congress that preclude more comprehensive structural reforms,  infrastructure spending and a more responsive fiscal policy.’

El-Erian is  not the only one. One of our favourite knife men, Larry Summers, is suggesting  more nip and tuck on the whole world economy.

It was Summers,  as secretary of the Treasury between 1999 and 2001, who helped stitch this  Frankenstein economy together.

He and his fellow  surgeons are responsible for its unsightly lumps and inhuman shape. Their  trillions of dollars of EZ credit leaked all over, causing bulges almost  everywhere.

Does China have  too much industrial capacity? Does the world have a glut of energy? Are  governments far too deep in debt? And corporations? And households? Didn’t  nearly every central bank in the world try to stimulate demand with cheap  credit…thus laying on a burden of debt so heavy that it now threatens the  entire world economy?

Poor Larry Summers
Now, Summers  waves his scalpel in the air and can’t wait to get the patient back on the  table.

He worries that  the US should have given the International Monetary Fund more money, which  would have ‘bolstered confidence in the  global economy’.

He thinks the  world’s problem is that ‘capital is  abundant, deflationary pressures are substantial, and demand could be in short  supply for quite some time’.

Poor Larry can’t  tell the difference between capital and credit.

Capital — what  you get from saving money and investing it wisely — is an economy’s real  muscle. EZ credit — what the quacks pump into flabby tissue to try to make  things look more fetching —is what has turned the economy into such a freak.

Alas, failing to  give more money to the IMF, says Summers, may mean ‘the US will not be in a position to shape the global economic system’.

That would be a real  pity.


Bill Bonner,
for the Markets and Money Australia


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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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