Headline April 2015 jobs report: “See no Evil…”

The April jobs report looked fine on the surface. “223,000 jobs were created during the month, which was a full 3,000 jobs more than the 220,000 that had been predicted by the consensus of economists….”

However…..                                                                      ………………………………………………….

See No Evil: What We Chose to Ignore in the April Jobs Report
Accessed from 321gold, May 21, 2015Peter Schiff 321gold
Excerpts:

“…But there was cause for concern. The March report had been an unmitigated disaster. Only 126,000 jobs were created when 247,000 were expected. Then, two lesser April employment reports had been released, the ADP private payroll data and the Challenger jobs cuts report that came in far below expectations (Challenger showed the biggest month over month increase in layoffs in three years). Even more harrowing was the recently released .2% annualized GDP in the First Quarter, a dismal April trade deficit, and the worst back to back monthly productivity reports in almost a decade. We needed good news, and we needed it bad.”

”The biggest shock should have been the downward revision of the already weak March numbers, which most people had expected would be revised upwards. Instead, 41,000 jobs were cut from March, leaving only 85,000 hires for the month, making it the worst month in job creation in three years. If March and April were averaged, we would only have about 150,000 jobs per month, numbers that would be indicative of a very weak economy. And don’t forget, April may be revised down next month just as drastically as March.”

”As you dig down, it gets worse. Average hourly earnings only increased .1%, which was exactly half of the expected .2% increase. They also revised down March’s gain from .4% to .2%. The report showed that the number of Americans who have left the labor force has hit an all-time high of 93,149,000. But the most important set of ignored ugly data was the breakdown of full time vs. part time jobs.”

“As far as the headline number of job creation is concerned, all jobs are equal. No matter if they involve brain surgery or lawn mowing, or if they are full time or part time, a job is a job. But the April Household Survey, which is released in support of the Nonfarm Payrolls, showed an increase of 437,000 part-time jobs, the biggest gain in part-time employment since June of last year. At the same time, the number of full time jobs declined by 252,000, the biggest drop of the year. Instead of talking about these lost real jobs, we talk about net gain in the total number of jobs which was only made possible by the huge increase in part time jobs. It is safe to say that a great many of those who found part time jobs would have preferred something with more hours and more pay. These facts show how the types of jobs Americans are finding continue to deteriorate, and explains why wage growth has been so disappointing.”

“It’s also worth noting that up to 175,000 of the new jobs reported in April resulted from assumptions that government statisticians make using the birth/death model. This technique compensates for unknown business formation to assume that a certain number of businesses come into being when the economy is strong. And since the government assumes that the economy is currently strong, it assumes those jobs were created. How convenient…”                                                                      __________________________________

America needs to unleash the power of free market dynamics, limited government, and economic liberty for citizens – to reignite economic growth and restore basic freedoms.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (943)

 

May 2015: Six U.S. banks are sitting on $278 trillion of exposure to derivatives. The global OTC derivatives market has grown to over $700 trillion.

“Operational risk is rising” for major banks and broker dealers in the global marketplace.

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“A derivative, put simply, is a contract between two parties whose value is determined by changes in the value of an underlying asset. Those assets could be bonds, equities, commodities or currencies. The majority of contracts are traded over the counter, where details about pricing, risk measurement and collateral, if any, are not available to the public.” (Source: DealBook, “Derivatives Markets Growing Again, With Few New Protections” – May 13, 2014, by Mayra Rodríguez Valladares)

Derivatives are utilized to hedge foreign exchange contracts, interest rate contracts, equity-linked contracts, commodity contracts, and credit default swaps. Interest rate contracts are normally the largest segment of the OTC derivatives market.

Periods of financial turmoil create market stresses which markedly increase the risk for “counterparty fail,” or defaults on counterparty derivative obligations by banks or primary broker dealers. Hedged positions can rapidly become worthless, as happened with AIG’s counterparties in 2008. Leveraged parties are then left ‘naked’ – and open to massive losses. And ‘counterparty fail’ on a small scale can lead to cascading counterparty liquidity issues on a very large scale.

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6 U.S. Banks Have 278 TRILLION Dollars Of Exposure To Derivatives
Posted by EU Times on Apr 14th, 2015:
“The very same people that caused the last economic crisis have created a 278 TRILLION dollar derivatives time bomb…”                                                                                       The six [U.S.] banks are… JPMorgan Chase, Citibank, Goldman Sachs, Bank of America, Morgan Stanley and Wells Fargo.

U.S. banks derivatives data – directly from the OCC’s most recent quarterly report (see Table 2)…
JPMorgan Chase
Total Assets: $2,573,126,000,000 (about 2.6 trillion dollars)
Total Exposure To Derivatives: $63,600,246,000,000 (more than 63 trillion dollars)

Citibank
Total Assets: $1,842,530,000,000 (more than 1.8 trillion dollars)
Total Exposure To Derivatives: $59,951,603,000,000 (more than 59 trillion dollars)

Goldman Sachs
Total Assets: $856,301,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $57,312,558,000,000 (more than 57 trillion dollars)

Bank Of America
Total Assets: $2,106,796,000,000 (a little bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $54,224,084,000,000 (more than 54 trillion dollars)

Morgan Stanley
Total Assets: $801,382,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $38,546,879,000,000 (more than 38 trillion dollars)

Wells Fargo
Total Assets: $1,687,155,000,000 (about 1.7 trillion dollars)
Total Exposure To Derivatives: $5,302,422,000,000 (more than 5 trillion dollars)
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The Bank for International Settlements announced last May 2014 that the global derivatives market had grown to $710 trillion.

That is not a “measurement of credit and market risks, but the figure merits attention from regulators and the public, which continues to suffer the ill effects from weakly managed derivatives portfolios in the global financial crisis. Higher volumes are a strong indication that derivatives players’ operational risk is rising.”

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U.S. banks are ‘levered up,’ and they are once again jeopardizing the financial stability of the U.S. economy with their risk profile and abiding ‘faith’ in derivatives counterparty liquidity.

During the last financial crisis, the Federal Reserve was forced to rescue failing financial institutions from their own ill-advised, leveraged-speculation breakdown events and collapsed hedging strategies –  with massive liquidity infusions.

It is time now for the Federal Reserve to protect the interests of U.S. citizens, with direct liquidity infusions, through a Citizens Credit Facility, to American families.

This targeted liquidity initiative will provide citizens with the opportunity to ‘get out of debt’ and avoid another severe ‘whiplash’ crisis – when next financial storm hits our shores.

And that storm is brewing….

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (937)

The Leviticus 25 Plan – freedom and financial security for citizens

Global economies are limping along under the strain of massive debt burdens and poor liquidity. Despite eight years of massive Central Bank liquidity flows targeting, and benefiting primarily, Wall Street’s financial sector, debt burdens remain high across many sectors and real economic growth is anything but ‘healthy.’
It is time now for Central Banks to initiate liquidity strategies that grant ‘citizens’ the same access to liquidity that was so generously provided to major banks and other financial entities over the past eight years. It is time to target liquidity flows to effect massive debt reduction at the family level. Globally.
Banks, hedge funds, and other financial entities will get their money – after it ‘touches’ the hands of the citizens.
The Leviticus 25 Plan grants individual citizens the authority to allocate resources on their own behalf, with the primary aim being to reduce debt at the family level, and advance self-determination in citizens managing their own daily affairs.
This stands in contrast to ‘central planning’ – where big government allocates resources as it deems fair, equitable, and for the common good – on behalf of its citizens. This is known as the official ‘social plan,’ and once that takes hold, citizens inevitably lose their freedom to question that ‘plan.’
One of history’s greatest economists, Austrian Friedrick A. von Hayek described this state as “The End of Truth” in his famous work, The Road to Serfdom: “Everything which might cause doubt about the wisdom of the government or create discontent will be kept from the people. The basis of unfavorable comparisons with elsewhere, the knowledge of possible alternatives to the course actually taken, information which might suggest failure on the part of the government to live up to its promises or to take advantage of opportunities to improve conditions–all will be suppressed. There is consequently no field where the systematic control of information will not be practiced and uniformity of views not enforced.”
Von Hayek also wrote, “The word ‘truth’ itself ceases to have its old meaning … it becomes something to be laid down by authority, something which has to be believed in the interest of the unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it.”
The Leviticus 25 Plan divests government of the power to control people and their affairs, by transferring to U.S. citizens the rightful authority to allocate resources, rather than allowing government to allocate resources in accordance with the official ‘social plan.’.
 The Leviticus 25 Plan returns the allocation of resources to its citizens for their dispersal through free market decisions – as citizens determine to be in accord with their own best interests and needs.
The Leviticus 25 Plan 2015 – $70,000 per U.S. citizen
The Leviticus 25 Plan 2015 (922)

Reversing big government – and restoring the American dream…

“How big government kills the American Dream”                                                     Authored by U.S. Rep. Jaime Herrera Beutler of Camas, Clark County, originally posted at The Seattle TimesAccessed from ZeroHedge 5/15/2015:

“Last week, Sen. Elizabeth Warren, D-Mass., and New York Mayor Bill de Blasio published their prescription for reviving the American dream. They are right to focus on the dream. They are wrong in their understanding of American history and the role government can play in restoring and fostering the dream.

In an 872-word argument titled “How to revive the American dream,” the words “free” or “freedom” never appear. That’s a clue.

They open with a chilling refrain: Opportunity for success for most Americans is hopeless. All but the rich are falling behind because the “game is rigged.” Their diagnosis: You can’t improve your situation by your own talents or effort. Their prescription: Don’t leave freedom in the hands of citizens. Only a massively larger central government, run by people like them, can help you.

Respectfully, this has been the claim of every person in history who has ever sought to gain enormous power through government control over the daily lives of their fellow citizens.”

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There is one powerful, new, outside-the-box solution – an economic plan that restores individual freedoms and financial health for all American families.

Look around – there is no other plan out there, anywhere.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (920)

Warning: The world economy faces a ‘titanic problem’

HSBC, the world’s third largest bank, by assets, has sounded the alarm bells:

May 13, 2015 – HSBC WARNS: Economy faces ‘titanic problem’…
Excerpts:
HSBC chief economist Stephen King: “The world economy is like an ocean liner without lifeboats. If another recession hits, it could be a truly titanic struggle for policymakers.”
Whereas previous recoveries have enabled monetary and fiscal policymakers to replenish their ammunition, this recovery — both in the US and elsewhere — has been distinguished by a persistent munitions shortage. This is a major problem….

According to King, the next global crisis could be highlighted four things:
• Wage growth will hurt corporate earnings and reduce the share of corporate profit contributing to US gross domestic product (it also doesn’t help that worker productivity is low). In turn, households and businesses will lose confidence in the economy, and the “equity bubble” will burst with collapsing stock prices.
• Nonbank financial systems such as insurance companies and pension funds will increasingly not be able to meet future obligations. This will cause a huge demand for liquid assets, forcing people to rush to sell despite no matching demand, triggering a recession.
• Forces beyond the Federal Reserve’s control, including the possibility that China’s economy and its currency could collapse. Weak commodity prices could also cause collapses in several emerging markets, as could continued strength in the US dollar.
• The Fed could cause the next recession by raising interest rates too soon, repeating the mistakes of the European Central Bank in 2011 and the Bank of Japan in 2000.

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Are U.S. citizens financially prepared to withstand another hard financial draw-down in the economy…?
Answer: No.

Total consumer installment debt sits at $3.363 trillion.
Barrons, May 11, 2015: Consumer Installment Debt (bil. $)-e, March 2015: $3,363.3
Percent change from year ago: +6.83%

Americans are sitting on $13.428 trillion in mortgage debt.                                     Federal Reserve Board of Governors:                                                                              Total Mortgage debt outstanding (2014Q4): $13.428 trillion

Total global derivatives exposure – as of one year ago – over $700 trillion.
Global Research – May 27, 2014: “According to the Bank for International Settlements, the total notional value of derivatives contracts around the world has ballooned to an astounding 710 trillion dollars ($710,000,000,000,000). Other estimates put the grand total well over a quadrillion dollars.”

Wall Street’s financial sector shed massive debt burdens, courtesy of the U.S. government and the Federal Reserve – which showered them with trillions of dollars to help them regain their ‘financial health.’

Fed policies did not result in an proportional measure of debt relief for Main street America.

It is now time initiate that relief – and to neutralize, in advance, the potential effects on American families of another global economic ‘storm.’  It is time to grant equal access to liquidity for U.S. citizens – for wide-scale debt elimination – and restoring ‘financial health.’

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (915)

Fall 2008: Wall Street financial sector ‘on the ropes’ from large gambles, systemic blunders. Fed ‘firehosed’ trillions in bailouts.

In the Fall of 2008 global financial markets began cascading lower as default waves began crushing the balance sheets of major financial institutions and freezing credit markets. The Federal Reserve moved aggressively to initiate various forms of direct (and indirect) debt monetization, emergency loans, credit guarantees, and toxic asset transfers.

Most of these liquidity flows were targeted to benefit the very institutions which had lit the fuse on the financial crisis with their leveraged speculation strategies – which disintegrated with the collapse of the housing market.

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Excerpts from “The Quiet Coup,” by Simon Johnson, The Atlantic May 2009:

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay.

This is precisely what drove Lehman Brothers into bankruptcy on September 15 [2008], causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t. AIG’s Financial Products division, for instance, made $2.5 billion in pretax profits in 2005, largely by selling underpriced insurance on complex, poorly understood securities.

Often described as “picking up nickels in front of a steamroller,” this strategy is profitable in ordinary years, and catastrophic in bad ones. As of last fall [2008], AIG had outstanding insurance on more than $400 billion in securities. To date, the U.S. government, in an effort to rescue the company, has committed about $180 billion in investments and loans to cover losses that AIG’s sophisticated risk modeling had said were virtually impossible.

Stanley O’Neal, the CEO of Merrill Lynch, pushed his firm heavily into the mortgage-backed-securities market at its peak in 2005 and 2006; in October 2007, he acknowledged, “The bottom line is, we—I—got it wrong by being overexposed to subprime, and we suffered as a result of impaired liquidity in that market. No one is more disappointed than I am in that result.” O’Neal took home a $14 million bonus in 2006; in 2007, he walked away from Merrill with a severance package worth $162 million, although it is presumably worth much less today.

In October [2009], John Thain, Merrill Lynch’s final CEO, reportedly lobbied his board of directors for a bonus of $30 million or more, eventually reducing his demand to $10 million in December; he withdrew the request, under a firestorm of protest, only after it was leaked to The Wall Street Journal. Merrill Lynch as a whole was no better: it moved its bonus payments, $4 billion in total, forward to December, presumably to avoid the possibility that they would be reduced by Bank of America, which would own Merrill beginning on January 1. Wall Street paid out $18 billion in year-end bonuses last year [2008] to its New York City employees, after the government disbursed $243 billion in emergency assistance to the financial sector.

In a financial panic, the government must respond with both speed and overwhelming force. The root problem is uncertainty—in our case, uncertainty about whether the major banks have sufficient assets to cover their liabilities. Half measures combined with wishful thinking and a wait-and-see attitude cannot overcome this uncertainty. And the longer the response takes, the longer the uncertainty will stymie the flow of credit, sap consumer confidence, and cripple the economy—ultimately making the problem much harder to solve. Yet the principal characteristics of the government’s response to the financial crisis have been delay, lack of transparency, and an unwillingness to upset the financial sector.

…[TARP] money was used to recapitalize banks, buying shares in them on terms that were grossly favorable to the banks themselves. As the crisis has deepened and financial institutions have needed more help, the government has gotten more and more creative in figuring out ways to provide banks with subsidies that are too complex for the general public to understand….
Full article: http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/
Simon Johnson, a professor at MIT’s Sloan School of Management, was the chief economist at the International Monetary Fund during 2007 and 2008. He blogs about the financial crisis at baseline scenario.com, along with James Kwak, who also contributed to this essay.
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NoteThe Leviticus 25 Plan, featuring direct credit extensions from the Federal Reserve to American families, grants U.S. citizens the same access to liquidity that was provided to Wall Street’s financial sector.

This ‘ground-breaking’ solution is critical for reigniting economic growth, restoring free market dynamics, and curtailing the suffocating prerogatives of big government central-planning.

Any objection that The Leviticus 25 Plan might be unfair to Wall Street ignores the damage major financial firms inflicted upon themselves, along with the massive collateral damage they caused to the general economy and Main Street America.

The time has arrived for American families to receive their own just considerations – direct liquidity extensions from the Federal Reserve.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (906)

The grand American slide continues. There is one plan that can change it all – in a big way…

According to RealtyTrac’s latest U.S. Real Estate Statistics & Foreclosure Trends Summary, “There are currently 842,773 properties in U.S. that are in some stage of foreclosure (default, auction or bank owned) … In March, the number of properties that received a foreclosure filing in U.S. was 20% higher than the previous month and 4% higher than the same time last year.”

Think about that – 842,773 properties in some stage of foreclosure – equals approximately  842,773 families in America who will be losing their homes over the coming 6-12 months..  And think about all of the additional families in America that have lost their homes over the past year in completed foreclosure events…. and the families yet to come.

We bailed out Wall Street’s financial sector — to help them regain their ‘financial health.’ Remember, these are the companies who engaged in various creative forms of leveraged speculation – they were rolling the dice – and they lost.  And our Fed / Treasury bailed them out.

And how did average American citizens come out on the deal?  Approximately 14 million families lost their homes between 2008 and 2014.

And the bleeding continues.

And how are working Americans making out in terms of real (inflation-adjusted) median household income?  Not so good:

Source: Median Household Income Declined in March /www.advisorperspectives.com/

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It is time to get America turned around.

It is time to restore financial health to real Americans: debt reduction, economic growth, opportunities for success, liberty.

It is time to grant American families the same access to liquidity (trillions of dollars worth) that was granted to the likes of Morgan Stanley, Citigroup Inc, Bank of America Corp, Royal Bank of Scotland Plc, UBS AG, Goldman Sachs, JP Morgan Chase, Deutschebank, Barclays, Merrill Lynch, and many, many more…

There is one plan that levels the playing field.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (901)

U.K. Telegraph: €2 trillion-worth of eurozone government bonds trade at negative rates – get ready for mass default..

Negative interest rates put world on course for biggest mass default in history

More than €2 trillion-worth of eurozone government bonds trade on a negative interest rate. It’s a bubble that is bound to end badly
by Jeremy Warner – 28 April 2015
Excerpts:
Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.
With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.

On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it’s 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it’s 17pc.

What makes today’s negative interest rate environment so worrying is this; to the extent that demand is growing at all in the world economy, it seems again to be almost entirely dependent on rising levels of debt…..

The combined public debt of the G7 economies alone has grown by close to 40 percentage points to around 120pc of GDP since the start of the crisis, while globally, the total debt of private non-financial sectors has risen by 30pc, far in advance of economic growth.
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Investors paying governments … “for the privilege of lending to them..?”

Europe needs a fresh new plan – fast.

Get your citizens out of debt.  Start now, before the next default wave hits. Reduce the dominant role of government over the lives of citizens. Restore economic liberty.

And prepare for robust economic growth – and the return of financial health.

The ground-level solution:                                                                                                  The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (898)

 

“Freedom to order our own conduct…” F.A. Hayek

“Freedom to order our own conduct in the sphere where material circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily recreated in the free decision of the individual. Responsibility, not to a superior, but to one’s own conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.”   – Friedrich A. von Hayek, The Road to Serfdom

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When government gains control of the material circumstances which must order the very lives of its citizens, the moral sense of a nation is sacrificed.

It is time to return the control of material circumstances back to the people, allowing the free expression of moral values, recreated daily in the free decisions of individual citizens to order their daily lives in accordance with their own consciences.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (890)