Democrats, Progressive Republicans Take Sledge Hammer to Economy

Bloomberg reports that the economy is in a tailspin.  The unemployment rate is now 9.7%, 0.2% lower than last month, but that statistic deceives.  Last month, there were 431,000 new jobs with 411,000 census workers hired. Only 41,000 private sector workers were hired.  Manufacturing jobs increased by 29,000  while service jobs, mostly temporary, increased by 27,000. The retail job number fell.

The labor force fell by over 200,000.  A statistical characteristic of the unemployment rate is that people not in the labor force are not counted in the unemployment rate. So if you give up looking for a job you are not counted.  200,000 left in response to the policies of Obama and the Democrats. They are so great at helping the average American. 

Now if you subtract the 200,000 who left the labor force and the 411,000 temporary census jobs from the 431,000 new jobs, do you really find an improvement in unemployment?

The truth is that the unemployment rate is too low.  The reason is that the government has subsidized badly run businesses that should be terminated and much of government is pure waste.  Rather than subsidize and stimulate waste as the Democrats have, the incompetently run businesses need to close.

Money should have been spent on welfare subsidies to the unemployed, whose lives have been upended by the incompetence of the Progressive/Keynesian economic system. Instead, the economy has been put on life support and the misallocation of investment will cause continued decline until the Democrats and Progressive Republicans are booted out of office.

I feel sorry for my students, who look forward to suffering economically because of the moron whom they voted into office, Barack Obama.

Great Video on the Flotilla

Saul Alinsky pioneered the use of the media to make one's opponent look bad. The flotilla was a classic Alinsky tactic, and the psychopathic left (including the  Times) and its serial killing allies are eager to capitalize on it. Unfortunately the Isralis fell for the bait. But let us not confuse Alinsky tactics with facts.  The Israelis had boarded the boat and were attacked with one thrown overboard first. 

As far as the announcer's comments on the Times's biased coverage, it has long been obvious that the once-great newspaper can be taken less seriously than the Star or the Enquirer.  The Star doesn't have ideological baggage or the economic interests of the Ochs Sulzbergers to color its articles and has been disciplined through law suits so that its coverage is truthful.  The Times has no such discipline because no one will sue them for telling whoppers on behalf of the bailout and the Obama administration.

Hat-tip Merle Levine:

Laughing as You Sink--How Europe Will Not Solve Its Problem

H/t Campaign for Liberty.

Is the Ride to $3,000 Gold Going to Hit Air Pockets?

The graphs above are of the Power Shares DB Commodity Index (DBC) which tracks sweet crude oil, heating oil, RBOB Gasoline, natural gas, brent crude, gold, silver, aluminum, zinc, copper grade A, corn, wheat, soybeans, and sugar; the Power Shares DB Agricultural Index, (DBA) which tracks corn, wheat, soy beans and sugar; and GLD, the SPDR gold trust, which tracks gold.  On May 28 Smart Trend.com reported that the agricultural index is in a bearish trend.  

As you can see in the charts above, the DBC and DBA peaked in 2008 and have stayed off their peaks, while GLD, the third graph, has risen consistently.

Personally, I have no more faith in the word of the US Congress than I do in the word of a three card Monty dealer on 42nd Street.  Given the massive increases in deficits under President Obama and the even more massive increase in the monetary base in 2008 (and consistent increases in the US money supply ) there is no reason to think that gold and commodities will do anything but increase over many years. Ultimately, speculation and replacement of the dollar with gold by frenzied Americans trying to escape the government's legal tender law will push up the gold price further. 


But gold has increased almost five-fold since 2001, while other commodities have not kept place and have significantly fallen since 2008.  A general rule is to buy low and sell high.  It is possible that the gold market is more rational than other commodities because industrial demand is greater for oil, food and other metals than for gold. But it is just as possible that it is less rational because gold is subject to romance and speculation. The other commodities tell a story different from gold.

Gold is going up because of speculation in anticipation of inflation, and if there is inflation then the other commodities will go up as well.  Also, hyper-inflation might mean a two-fold increase in prices, but gold has already gone up five-fold.

I do not doubt that gold will continue to go up.  But if there were shortages in gold due to insufficient production in the 1990s, there ought to have been shortages in other commodities as well.  Hence, in the long run I wager that there will be continued speculation in gold and that when inflation takes off there will be a gold bubble. But I would think that other commodities where there is less speculation, romance and publicity are more reliable investments at this time.  When inflation starts, many will flock to gold, but the ride can be bumpy because there is speculation in the gold market. 

Let's say the Fed decides to increase interest rates.  There will likely be declines in the stock market, but gold could be even harder hit.  Over time the price will come back, but I find it hard to believe that without a concomitant increase in other commodities' prices the gold price will continue a secular increase. The reasoning for buying gold is that gold is a hedge against inflation, but so are the DBC and the DBA, and they haven't increased for two years. So if I were buying commodities now I would buy those and hold off on the gold.

According to Thoughts.com the dollar ought to be worth .7734 ounces of silver.  Today silver sells for $17.95 and gold sells for $1,207 per ounce.  Thus, the dollar is worth .0557 ounces of silver, 0.3% of the level at which the Coinage Act of 1792 defined it. If you think the decline in value was directed into the hands of the middle class, which William Greider claims in his book Secrets of the Temple, you're on drugs.  The money is created by banks who collect interest and they lend it to speculators, hedge funds, corporations and most of all, Wall Street. As well, it boosts stock prices because low interest rates increase the present value of future earnings.  Left wingers like Greider, who advocate Keynsianism, like to avoid discussing how their ideas support Wall Street and the banking lobby.

The additional money causes inflation, raising prices for everyone. Hence, it harms those who do not own stocks and real estate and are not bankers and helps those whose entire livelihood comes from stocks and real estate.  The middle class gets something back through increasing house prices, but those who save and work hard are penalized in favor of those who borrow.  Hence, it makes everyone poorer as the public learns that invention, innovation, hard work and creativity are for suckers, and borrowing to buy a condo is how to make a living.

The inflationary economy and the triumph of the left in terms of three card Monty government means that America's prospects are much worse than they've been.  A collapse of the financial and monetary system would seem to be a possibility. Hence, gold and silver are good bets. But I'm going to buy when they fall.