Econ 2009

[ewmayer]

Overheard on ZeroHedge:

Couple of (pointedly) funny reader comments:

[Regarding the cash-for-clunkers program]:

"We're now in a world where the American government borrowing from the Chinese government to subsidize the purchase of Japanese cars is considered one of the most successful government programs."

[Regarding the government-sponsored "greenshoots" economic disinformation propaganda campaign]:

The only green shoots I see are with the increase in "Dickweeds."



Judge: BofA 'effectively lied' to shareholders: Bank of America, SEC have two weeks to make arguments that the $33 million settlement in a suit over Merrill Lynch bonuses should be approved.

My Comment: A $33 million fine (and nary a hint of potential criminal penalties for any of the crooks involved) for what amounts to a $3.6 billion fraud ... oh yeah, that`s a huge disincentive for the perpetrators to ever engage in such activities again, isn`t it? That`s the good old SEC, touch on securities fraud as always. Thankfully judge Rakoff isn`t buying it ... let`s hope he doesn`t end up recusing himself, taking early retirement or "medical leave" under mysterious circumstances ... after all the fraud goes well beyond BofA CEO Ken Lewis, as he was effectively coerced to commit securities fraud (by way of lying to BofA shareholders about the risks) in the BofA acquisition of Merrill Lynch by none other than then-Treasury Secretary Hank Paulson and Fed chair Bernanke.



Government Now Leading Subprime Lender

Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.

Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?

Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.

Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.

My Comment: Sound familiar? It should ... but it gets even better:

On June 18, HUD’s Inspector General issued a scathing report on the FHA’s lax insurance practices. It found that the FHA’s default rate has grown to 7%, which is about double the level considered safe and sound for lenders, and that 13% of these loans are delinquent by more than 30 days. The FHA’s reserve fund was found to have fallen in half, to 3% from 6.4% in 2007—meaning it now has a 33 to 1 leverage ratio, which is into Bear Stearns territory. The IG says the FHA may need a “Congressional appropriation intervention to make up the shortfall.”

My Comment: LOL, "Congressional appropriation intervention" ... where I come from we call that a "taxpayer-funded bailout". The government has apparently bought into the guaranteed-to-end-badly delusion that the best way to address the financial and economic meltdown resulting from the housing and credit bubble is to blow another H&CB, but this time a "government supervised" one. Beautiful ... just beautiful. The government has taken over the management of the crooked subprime-lending casino, but other than that it`s simply business as usual in Bubble Land. But if you think I am pissed off about this ongoing scammery, you should check out Denninger`s resulting rant.

[ewmayer]

Excellent perspective on last Friday`s "better than expected" employment data from NY Times columnist Bob Herbert - I normally dislike quoting articles wholesale, but this one merits it:

NYT Op-Ed | Bob Herbert: A Scary Reality[/url]: You can put whatever kind of gloss you want on last week’s unemployment numbers, but the truth is that while they may have been a bit better than most economists were expecting, they were still bad, bad, bad.

Last week was a pretty good one for President Obama. Bill Clinton helped out big time when he returned from North Korea with the American journalists Laura Ling and Euna Lee. Sonia Sotomayor was elevated to the Supreme Court. And Friday’s unemployment report registered a tiny downward tick in the jobless rate.
Skip to next paragraph

But for American workers peering anxiously through their family portholes, the economic ship is still sinking. You can put whatever kind of gloss you want on last week’s jobs numbers, but the truth is that while they may have been a bit better than most economists were expecting, they were still bad, bad, bad.

Some 247,000 jobs were lost in July, a number that under ordinary circumstances would send a shudder through the country. It was the smallest monthly loss of jobs since last summer. And for that reason, it was seen as a hopeful sign. The official monthly unemployment rate ticked down from 9.5 percent to 9.4 percent.

But behind the official numbers is a scary story that illustrates the single biggest challenge facing the United States today. The American economy does not seem able to provide enough jobs — and nowhere near enough good jobs — to maintain the standard of living that most Americans have come to expect.

The country has lost a crippling 6.7 million jobs since the Great Recession began in December 2007. No one is predicting a recovery in the foreseeable future powerful enough to replace the millions of jobs that have vanished in this historic downturn.

Analysts at the Economic Policy Institute noted that the economy has fewer jobs now than it had in 2000, “even though the labor force has grown by around 12 million workers since then.”

Two issues that absolutely undermine any rosy assessment of last week’s employment report are the swelling ranks of the long-term unemployed and the crushing levels of joblessness among young Americans. More than five million workers — about a third of the unemployed — have been jobless for more than six months. That’s the highest number recorded since accurate records have been kept.

For those concerned with the economic viability of the American family going forward, the plight of young workers, especially young men, is particularly frightening. The percentage of young American men who are actually working is the lowest it has been in the 61 years of record-keeping, according to the Center for Labor Market Studies at Northeastern University in Boston.

Only 65 of every 100 men aged 20 through 24 years old were working on any given day in the first six months of this year. In the age group 25 through 34 years old, traditionally a prime age range for getting married and starting a family, just 81 of 100 men were employed.

For male teenagers, the numbers were disastrous: only 28 of every 100 males were employed in the 16- through 19-year-old age group. For minority teenagers, forget about it. The numbers are beyond scary; they’re catastrophic.

This should be the biggest story in the United States. When joblessness reaches these kinds of extremes, it doesn’t just damage individual families; it corrodes entire communities, fosters a sense of hopelessness and leads to disorder.

The unemployment that has wrought such devastation in black communities for decades is now being experienced by a much wider swath of the population. We’ve been in deep denial about this. Way back in March 2007, when the official unemployment rate was a wildly deceptive 4.5 percent and the Bush crowd was crowing about the alleged strength of the economy, I wrote:

“People can howl all they want about how well the economy is doing. The simple truth is that millions of ordinary American workers are in an employment bind. Steady jobs with good benefits are going the way of Ozzie and Harriet. Young workers, especially, are hurting, which diminishes the prospects for the American family. And blacks, particularly black males, are in a deep danger zone.”

The official jobless rate is now more than twice as high — 9.4 percent — and even more wildly deceptive. It ticked down by 0.1 percent last month not because more people found jobs, but because 450,000 people withdrew from the labor market. They stopped looking, so they weren’t counted as unemployed.

A truer picture of the employment crisis emerges when you combine the number of people who are officially counted as jobless with those who are working part time because they can’t find full-time work and those in the so-called labor market reserve — people who are not actively looking for work (because they have become discouraged, for example) but would take a job if one became available.

The tally from those three categories is a mind-boggling 30 million Americans — 19 percent of the overall work force.

This is, by far, the nation’s biggest problem and should be its No. 1 priority.

My Comment: But, but, president Obama said the economic eggheads at NBER told him that "the recession may have already ended this past July" (read this explanation of that from a full-time Wall Street douchebag here.) Those 30 million un- and underemployed losers better get with the program, and damn quick.

I can`t resist quoting a snip from the above 247wallst.com article:

There is enough data in at this point to say with a reasonable amount of authority that the economy bottomed this summer and that this recession is over. The question that the government and experts face is whether the recovery will last for several years or only several months. There is a powerful argument to be made that a new downturn could begin before the middle of 2010. Unemployment would be the cause of another downward spiral and the government figures for July, August, and September will be an excellent barometer of whether the recovery will be and can be sustained. A sharply slowing pace of job cuts should give the $787 billion stimulus package time to take hold and begin to create new jobs and capital spending.

My Comment: So if you experience a really bad recession and at some point things are really, really bad and pretty much can't get any worse shy of all-out nuclear war or mass famine, that means "the recession is over" ... interesting. Analogously, would one describe a heroin junkie who pawns all of his belongings and ends up living in a filthy alley and infected with AIDS from sharing dirty needles in terms like "his problems with addiction are over"? Also curious is the bit about needing sharply reduced layoffs to "give the stimulus package time to take hold". Um, excuse me for asking silly questions, but WAS SHARPLY REDUCING JOB CUTS NOT ONE OF THE MAJOR POINTS OF THE STIMULUS PACKAGE? McIntire`s sentence amounts to "once conditions improve by themselves to the point where the stimulus is not needed, that will give the stimulus time to work". Bloody Keynesian morons ... let me guess, if the economy once again begins to show signs of continued deterioration so blatantly obvious that not even your typical blinkered, green-shoot-smoking economist dipshit can overlook, then it won`t have been that "the stimulus failed because it was ill-conceived and just another huge misallocation of capital like the bank and automaker bailouts", no, instead it will be "we didn`t stimulate enough", something the NYT chief Keynesian Clown (Mish`s term) Paul Krugman has been warning against. Krugman is a very smart guy and I agree with him on many things, but this throw-borrowed-and-printed-money-in-all-directions-until-something-good-happens crap he and his fellow Keynesians continually peddle just pisses me off.

[jasonp]

Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee

GNMA bonds are also really popular now because
- they sailed through last year, even the last decade, without a hiccup
- they're perceived as 'safe', only slightly less safe than treasuries
- they yield a lot more than treasuries, or pretty much anything else on the fixed income side right now.

A scary number of people equate GNMA funds with cash, because everyone is looking for safe high-yield places to stash their cash. It might be federally insured, but mortgage bonds suffer unless interest rates stay mostly the same.

[cheesehead]

Originally Posted by ewmayer

My Comment: But, but, president Obama said the economic eggheads at NBER told him that "the recession may have already ended this past July" (read this explanation of that from a full-time Wall Street douchebag here.) Those 30 million un- and underemployed losers better get with the program, and damn quick.

I think it has been previously mentioned in either this thread or its predecessor that unemployment is a trailing indicator, not a leading or even coincident indicator.

It is indeed quite possible, and not at all strange, for an economy to turn upward while unemployment is high and even increasing. It's well known and sensible that, in times like these, employers tend to first extend the working hours of their current employees before they hire new employees or re-hire those previously laid-off.

Now, it may be that the NBER is overly optimistic, perhaps not taking fully into account the particular details of this recession that might differ from past recessions (or -- *gasp* -- that Obama has put the most positive possible spin on the situation).

It may even well be that the historically-high numbers of "people who are officially counted as jobless with those who are working part time because they can’t find full-time work and those in the so-called labor market reserve — people who are not actively looking for work (because they have become discouraged, for example) but would take a job if one became available" may make recovery difficult or slow, possibly even to the extent of causing a relapse.

But to criticize an end-of-recession call on the simplistic basis that unemployment is not yet decreasing (real decrease, not the 0.1% blip) is to ignore the historic record and unemployment's status as a trailing, not leading or coincident, indicator.

Furthermore, it may yet be (as judged in future years after things settle, with calm examination in hindsight) that the stimulus program has made a substantial improvement in what the numbers would have been (i.e., even scarier) in its absence, even though it has not completely halted job losses.

So, declaring the stimulus program a failure already is totally premature, and more indicative of either:

(a) the extents to which we expect instant gratification,

(b) the extents of our ignorance of lead-time requirements for economic actions to have effect, or

(c) the extent of political motivations to portray this administration negatively,

than of any informed, objective evaluation of the programs' results.

[ewmayer]

Originally Posted by cheesehead

Furthermore, it may yet be (as judged in future years after things settle, with calm examination in hindsight) that the stimulus program has made a substantial improvement in what the numbers would have been (i.e., even scarier) in its absence, even though it has not completely halted job losses.

"Not completely halted" is an interesting way to put it. Did you actually bother to look deeper into the BLS data? Here, allow me to help with that...especially interesting is the historical trend in the statistical fudge factory known as the Birth/Death Model, which is by far the easiest way for the BLS to manipulate the end-result numbers, were they so inclined...

Chris Martenson has a nice breakdown of the "better than expected" latest jobless data from the BLS - recommend visiting the original article to see the charts mentioned (easier than separately clicking the links I added to the quoted snippet) in the quote below (underlines are mine):

Unemployment Report Distortions

The release of the July unemployment report was filled with a wide array of distortions and inexplicable results (especially from the Birth-Death model), which have undoubtedly resulted in a better-than-warranted reported gain. In this post we'll explore these oddities in some detail.

The news:

U.S. economy sheds fewer jobs than expected

WASHINGTON (Reuters) - U.S. employers cut 247,000 jobs in July, far less than expected and the least in any month since last August, according to a government report on Friday that provided the clearest evidence yet that the economy was turning around.

With fewer workers being laid off, the unemployment rate eased to 9.4 percent in July from 9.5 percent the prior month, the Labor Department said, the first time the jobless rate had fallen since April 2008.

Wait, how can you lose jobs and have the rate of unemployment fall? This doesn't make sense, because it is the equivalent of saying, "I spent more than I earned and my savings went up." The key here is understanding the ways in which the government measures unemployment.

First, job gains/losses are measured by a sampling of businesses (called the "establishment" data). This gives us the headline number of 247,000 jobs lost. Second, the rate of unemployment comes from a completely different sample, this one of households, which gives us the 9.4% rate of unemployment.

As always, the devil is in the details. Without the Birth-Death model providing the largest addition of jobs in its entire series for July, the 247,000 jobs lost number would have been higher.

The table below shows the contributions or subtraction of jobs provided by the Birth-Death model in each month of July since its creation. This July sports the highest addition ever:

http://www.chrismartenson.com/files/..._B-D_model.jpg

Normally, July and January are "true-up" months, where all the past overstatements of the Birth-Death model are cleaned up.

Does it make sense to you that this July, out of all months, the Birth-Death model should be showing the largest monthly gain in the series? It makes sense to me that July 2006 could have squeaked out a positive, since that was at the tail end of a strong period of growth. But July 2009? No, not even in the slighest.

If the B-D model had turned in a far more normal looking -60k to -80k result, then the number of reported lost jobs would have been in the range of 350,000 job losses, not the 237,000 reported.

However, I would have expected the fact that the B-D model has added 879,000 this year since the last true-up in January, during the worst period of economic growth since the Great Depression, to have been a strong indication that this July would have resulted in one of the largest negative July adjustments on record. Instead we got the strongest positive one!!

http://www.chrismartenson.com/files/...ly_actuals.jpg

This is simply so far out of the bounds of "reasonable" that I am almost out of words.

But it gets worse.

In the table below showing the Household data (source), we can see that the way in which the rate of unemployment dropped from 9.5% to 9.4% was almost entirely due to the fact that 637,000 people were dropped from the labor force - not from an increase in employment.

http://www.chrismartenson.com/files/...ol_expands.jpg

If we left these 637,000 people in the labor force, then the rate of unemployment would have increased from 9.5% to 9.8%. What's the difference between unemployment slipping to 9.4% rather than increasing to 9.8%?

All the difference in the world when you have a major initiative underway:

[Note: I am not displaying any sort of partisan or political bias in posting this news item - I am devoutly non-partisan and my track record spanning administrations will bear this out.]

Obama Setting Out to Put Brighter Face on Economy

August 4, 2009

WASHINGTON — The White House is making a major push this week to persuade Americans that President Obama’s policies are helping bring the nation out of recession. But a four-letter word — jobs — may well get in the way.

With poll numbers showing that support for Mr. Obama’s handling of the economy has declined, the president and other top administration officials — Vice President Joseph R. Biden Jr., Energy Secretary Steven Chu and Commerce Secretary Gary Locke — will hit the road on Wednesday in a coordinated show of force.

They will try to make the case, as the president said Saturday in his weekly address, that “in the last few months, the economy has done measurably better than expected.”

They have some statistics to back them up.

If you are wondering about the political pressure that propels the BLS (et al.) to produce misleading but favorable economic statistics, you need look no further than this article. Obama, like every president before him, has a strong desire to use his station to inject optimism into the economy. That's hard to do when the statistics are dismal, so every effort is made to have them be brighter and more favorable than they really are. Same as it ever was.

Bad statistics can be good for politicians, but not so much for sound decisions.

Do we have the "clearest evidence yet that the economy is turning around," as the original article claimed above, or do we have evidence of something else, like, perhaps, statistical trickery?

My Comment: Note also the overlap with the major PR push to get the Obama healthcare reform plan passed by year`s end - the administration knows that with poll numbers slipping rapidly on that front, if they can`t convince most Americans that their economic policies are helping (especially with the mountain of debt those are incurring), they have zero chance of getting a major healthcare reform initiative passed - zero. Hence the pulling-out of all the stops to make the "green shoots" case.

[cheesehead]

Originally Posted by ewmayer

"Not completely halted" is an interesting way to put it. < snip >

You've made more of those words than I had in mind when I wrote them. However, I accept responsibility for having included them. I apologize for casually tacking on the last part of that sentence without noticing that its wording could be typical of an attempt to weasel rather than, as I intended, a mildly amusing cliche.

Now that I see how the phrase is so distracting, please accept my revision of the sentence in which it appeared:

Furthermore, it may yet be (as judged in future years after things settle, with calm examination in hindsight) that the stimulus program has made a substantial improvement in what the numbers would have been (i.e., even scarier) in its absence.

[Fusion_power]

Cheesehead,

While I don't entirely agree with ewmayer re his economic bearishness, I do agree with what he has posted re unemployment being a far worse picture than the govt is painting. When you whittle down the numbers, the ranks of the unemployed swelled significantly in July. I would rather have Obama get some honest numbers and trumpet them than to keep blowing smoke with these fake numbers.

In very real terms, 650,000 people were dropped from unemployment last month. 250,000 of them actually found jobs of some sort. That leaves 400,000 (in round figures) still out in the cold and without unemployment. Say what you will, that is a significant increase in the ranks of the unemployed. I still stand by my statement that by December, the true unemployment numbers will be 20% of the workforce. Any way you slice that it comes up with a DRASTIC impact to the economy. I am interpreting it that a second economic dip will occur within a year. Did I say dip? I should be more descriptive. Try substituting "PRECIPITOUS PLUNGE".

Please remember, the economy is a confidence game!

DarJones

[ewmayer]

Originally Posted by Fusion_power

In very real terms, 650,000 people were dropped from unemployment last month. 250,000 of them actually found jobs of some sort. That leaves 400,000 (in round figures) still out in the cold and without unemployment.

No, no, no - it's even worse than that, if you parse the numbers correctly:

- ~250,000 *net* jobs lost with the birth-death-model BSing (should be ~350,000 according to Martenson`s estimate, which seems quite reasonable based on historical B/D data for July and current trends)

- ~650,000 people were dropped from the statistics because they stopped looking for work or they exhausted their unemployment benefits.

So - presto, magico! - the government's unemployment data act as if 400,000 net jobs had been *created*, when in reality roughly that many jobs were *lost* - i.e. the reality was the EXACT OPPOSITE of the headline numbers. That's beyond statistical fudgery and "spin" there - as far as I'm concerned that's flat-out LYING. But hey, all the big banks are doing it, why shouldn't the BLS? After all, the ends (manipulating the markets upward so people "feel hopeful") justify the means, don't they?

Now do you understand why I continue to be so bearish? The reality is things are not getting better whatsoever, except in the sense of "slightly less awful than the truly horrifying numbers earlier this year". Meanwhile the Bizarro markets continue to rally on this kind of "good news", and the mere fact that the market bulls are being as delusional as ever they were during the dotcom or housing-bubble manias is taken as a "leading indicator" of an imminent recovery. Uh, these are the same "smart money leading indicators" which, like "90% of economists polled", completely *missed* the unsustainable asset-price-runup nature of both the dotcom and housing bubbles? And we should believe that these folks suddenly have a frickin' clue about the real economy?

Of course, if you're a market maker or investment bank and the Fed throws a couple hundred billion $ your way and says "goeth thee now and speculateth mightily in the equity and commodity markets at 10:1 leverage in order to runneth up asset prices and convinceth the lambs that an almighty recovery is nigh at hand, praise be!" - well maybe you're just doing the rational thing, which is inflating the asked-for Next Big Bubble and riding it as long as you can. It's not like you can actually make money by lending to broke consumers and the companies who do business with them these days, is it?

[Fusion_power]

Ewmayer,

I am not quoting from your posted source of numbers. I am running my own numbers. Here is how they stand.

650,000 people were dropped from unemployment benefits last month.
@250,000 of that 650,000 found jobs.
@400,000 of that 650,000 are SOL. No job, no unemployment.

The 250,000 net loss from the B/D data is misleading because it does not true up the lost jobs ytd.

When you figure in the actual changes, you arrive at the figures I am using.

End result, the ranks of the unemployed increased by .4 % last month. That is a loss of about .1 % per week. There are still 15 weeks in the year. If the slide continues in the same range, then we will lose 1.5% more of the workforce to unemployment. By year end, we are above 20% unemployment. Or if you insist on using the govt bogus figures, we finally get about 10% given that another 2 million people will drop from the unemployment figures over that time period.

Any way you slice or dice it, you wind up with the nastiest picture imaginable of the U.S. economy. Govt unemployment figures are just a bunch of smoke and mirrors atm.

DarJones

[ewmayer]

Originally Posted by Fusion_power

I am not quoting from your posted source of numbers. I am running my own numbers. Here is how they stand.

650,000 people were dropped from unemployment benefits last month.
@250,000 of that 650,000 found jobs.

Where did you get that "250k of the 650k found jobs" bit? If they dropped out of the officially-tallied workforce, by definition they either exhausted their unemployment benefits (but are still out of work) or stopped looking for work (but are still out of work). If they had found jobs they would be "in the labor force" rather than "not in the labor force", which is what the 650k (actually reported as 637k) represents.

The only 250k-ish number I see in the July BLS data is the net gain in unemployed, which is a completely *separate* category from the above folks. (Though those in the fresh 250k cohort may eventually also end up in the same "invisible" category as the latter.) In other words there's a 250k in the report, but it has a *minus* sign.

[Fusion_power]

http://www.bls.gov/news.release/empsit.nr0.htm
http://www.bls.gov/news.release/jolts.nr0.htm

You don't have to look far to find the figures needed most. Just find the "labor force status" header.

The critical numbers are +637,000 people who are "not in labor force" and the total loss of jobs nationwide of -422,000. But these figures are bogus because they are "seasonally adjusted".

Most of the numbers I use below are from the above two pages. You will have to dig a bit to figure out where a few of them come from.

This is using round figures.

1. The U.S. workforce is calculated at 154,000,000
2. The current number of unemployed persons is 14,500,000
3. The calculated unemployment rate is 9.4%
4. But, none of these figures reflect long term unemployed of about 5,000,000
5. and it does not count workers forced to work reduced hours 8,800,000
6. and it does not count workers who are going back to school 1,500,000
7. and it does not count workers who have taken part time jobs to make ends meet (estimated 3,500,000)
8. and it does not count workers who had to take lower paying jobs because that was all they could find (2,200,000 estimated)


Because the data on job turnover is current only for June, I am using those figures rounded for July since indicators show the two months are very similar. As you can see, the number of jobs filled is higher than the number of jobs open. This is because job openings don't last long in this economic climate.
1. Average number of jobs open in July is 2,600,000
2. Jobs filled in June 3,800,000
3. Jobs lost in June 4,400,000
4. net loss therefore of 600,000
5. Of the jobs filled, 3,000,000 were people who were collecting unemployment.
6. and of the jobs lost, only 3,400,000 were eligible for unemployment benefits
7. giving a net increase in number of unemployment claims of 400,000

Notice how much of a stark contrast this is to the BLS figures of 267,000 fewer people collecting unemployment? This gives you a good idea just how much the 'seasonally adjusted' figures are bogus. They are off by 133,000 people.

Now lets put some numbers together. The number of long term unemployed (over 27 weeks without a job) increased by 584,000. But of that 584,000 only 400,000 were collecting unemployment at the time and therefore fit the category that they fell off of the unemployment safety net. The 184,000 is made up of people who work construction jobs, independent contractors, and other jobs that do not have unemployment benefits. It also includes people fired for cause or who have not worked enough months to earn unemployment benefits or people who just chose to quit their job. Illegal aliens have to be considered elsewhere.

You have to watch closely to see who was collecting unemployment and who was not. The BLS figures fudge this bigtime.

Now lets go to the numbers that matter least of all because they are BLS fudged. In raw numbers, we lost 155,000 total jobs from May to June and lost another 422,000 jobs June to July.

in May, 155,081,000 people were working.
in June, 154,926,000 people were working.
in July, 154,504,000 people were working.

So this brings on a question. At what point does the unemployment rate begin to topple the economy? I don't think anyone can fully answer this question because there are so many unknowns. It would have to be a function of total household debt, number of unemployed, and amount of debt that is not being paid.

There are 160,000,000 people in the U.S. that either have a job or want a job.
There are about 22,000,000 people who are currently unemployed/underemployed in one form or another.
If the number of unemployed/underemployed increases to around 32,000,000, then I suspect we will have hit the point at which massive economic collapse is unavoidable.

Sorry, I was going to go through these numbers in more detail and explain them better, but I have a job site with an emergency. I will try to post again on this tomorrow.

DarJones