Government Approves 'Unemployed' as Job Description

The Bureau of Labor Statistics reports the national employment data based on an archaic model that omits various important factors when calculating its report. Any guesses as to how the Mogambo feels about that? That’s right, "We’re freaking doomed!".

Junior Mogambo Ranger (JMR) Phil S. sent me an article titled "Numbers Racket", with the subtitle "Why the economy is worse than we know", by Kevin Phillips, which first appeared in (I assume) Harper’s Magazine, and which I had talked about in a previous MoGu newsletter – although I forget which one, and I am not going to go find out because I can hardly stand to read that Stupid Mogambo Crap (SMC), as it is embarrassing enough to write it. I can only imagine your embarrassment in being caught reading it! Hahaha!

But this article is not about solving that old riddle, "Who is the most stupid: The Mogambo for writing his stupid crap, or the people who voluntarily read it?", but about how I am glad JMR Phil sent it to me, because there was something in it that I had missed before, where the discussion turned to unemployment.

Mr. Phillips writes, "The series nearest to real-world conditions is, not surprisingly, the highest: U-6, which includes part-timers looking for full-time employment as well as other members of the ‘marginally attached,’ a new catchall meaning those not looking for a job but who say they want one", and which is running at a frightening 9% unemployment.

Well, admittedly, this is not new, but the interesting part that IS new is when he writes, "Yet this does not even include the Americans who (as Austan Goolsbee puts it) have been ‘bought off the unemployment rolls’ by government programs such as Social Security disability, whose recipients are classified as outside the labor force."

That’s right! There are lots and lots of people who no longer have to work because the government supports them! Too bad he doesn’t give an estimate of how many these are!

But the new unemployment numbers came out, and right off the bat I see that the Civil Labor Force went up by 173,000 and the number of Employed went up by 360,000, but Non-Farm Payrolls went down by 20,000 and Goods Producing Payrolls went down by 110,000! Huh?

Of course, nobody is surprised that government employment went up by 9,000 employees to 22,385,000, which is up 224,000 over the last year.

In fact, there are now more people on Government Payrolls (22,385,000) than Goods Producing payrolls (21,618,000)! Hahaha! We are so freaking doomed! What makes it So Damned Funny (SDF) is that a conceited, self-absorbed nation like America, that boasts how smart we are, cannot possibly realize the utter, utter stupidity of this! Hahaha! And yet, here it is! Dare I repeat myself that we are freaking doomed? Sure! We’re freaking doomed! Hahaha!

Agora Financial’s 5- Minute Forecast ignores my jocular outbreak and somberly reports that "The U.S. economy shed jobs for the fourth-straight month in April" which they say is important because "in post-Great Depression history, a four-month losing streak has always preceded a recession." Yikes!

I am always interested in things that use "always" to describe them, which I have learned the hard way, such as "People always get upset when I tell them that they are stupid because they are not buying gold, even in response to Alan Greenspan of the Federal Reserve destroying the dollar by creating so much of them, so that the damned government can spend us into bankruptcy, and then they REALLY always get upset when I say that their stupidity has doubtlessly been passed along to their ugly, mutant children, who are, on average, the most ignorant, most stupid, most self-absorbed, most violent, most criminal bunch of worthless trash ever created in America, as indicated by standardized testing and personal experience, mostly from having a few of the rug-rats myself."

And the fact that I "always" have to defend myself against these stupid people, including my own wife and kids to show you the kind of treachery I have to put up with around here every freaking day of my life, makes me perhaps a little more sensitive to the word "always" being featured so prominently in the snippet "a four-month losing streak has always preceded a recession."

Maybe this "recession" thing is why the Labor Department reported that the U.S. lost another 20,000 jobs in April. In fact, the economy has shed 260,000 jobs since New Year’s Day!

I admire the way that John Williams restrains himself from busting out laughing as he says in his review of the government’s Payroll Survey that the "Bureau of Labor Statistics (BLS) reported a seasonally-adjusted jobs loss of 20,000 (loss of 28,000 net of revisions) +/- 129,000 for April 2008." Hahahaha! Plus or minus more than 600% of the estimate? Hahahaha!

I instantly see how I can use this to my advantage the next time my stupid boss calls me into her stupid little office to get "on my case" about something. Like yesterday, for example, I could have used this fascinating and powerful technique when she called me in to ask me about losing the stupid Lindsey contract, which was because old man Lindsey had a "Hillary Clinton for President" campaign bumper sticker on his car, and so I politely told him that he was "stupid, commie-rat Marxist pinko collectivist low-IQ trash", which he apparently took some exception to, and now it’s suddenly important to know how many OTHER contracts we lost because of me merely giving people what they deserve.

My first thought, of course, was to politely say, "None of your business, you stupid old cow, so shut up!", but I realized it WAS her business, and, even worse, six other instances of this same thing instantly ran through my mind.

Today, now that it is too late to do me any good, I realize that I could have said, "How many others? None! Give or take six, which should be good enough for you because your own Leftist trash government says it is good enough when calculating employment!"

Saving this for another day, I now turn to the Birth/Death Model, which plays such a prominent role in the government’s calculation of employment, and which showed a surprising gain of 267,000 jobs, which is the biggest increase in the last 12 months! Wow!

Before you go off shouting "The recession is over! They’re hiring again!", the Model showed that 45,000 jobs were added in Construction, which makes me laugh my Big Fat Mogambo Butt (BFMB) off, but not laughing in merriment and joy, but a dark and scornful laugh of contempt, because this would be the most jobs created in the Construction category in the entire last freaking year, which makes me laugh even harder and with more scorn! And LOTS more contempt!

Oddly enough, 83,000 jobs were created in the April’s Birth/Death Model in the category of "Leisure and Hospitality", which I figure is a pretty good estimate of the number of women who have recently become prostitutes because they are so desperate for money! Welcome to the hell of inflation!

Until next time,

The Mogambo Guru
for The Daily Reckoning
May 12, 2008

The Mogambo Sez: I feel sorry for those who have not converted their wealth into gold, silver and oil. Not sorry enough to give them some of mine, however. Just sorry.

And I will feel sorry for them when gold, silver and oil make me rich and them poor. Not sorry enough to give them some of mine, however. Just sorry.

Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.

The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning and other fine publications.

An old friend gave us a subscription to the National Geographic. When an issue comes, Henry takes it and spends hours reading. This month, the magazine devoted the whole issue to China and Henry passed almost all of Sunday afternoon studying it.

"China is unbelievable," was his judgment by evening.

Every detail is a superlative…bigger, faster, higher, more…more…more. Things are happening so fast that in just 10 years, China will be the world’s biggest economy. We don’t have to tell you what that means, dear reader. Give a guy some money and it’s not long before he thinks he can tell other people what to do and how to live. The United States became the world’s largest economy around 1900. By 1918, Woodrow Wilson was headed to France with his "14 Points."

"God himself only needed 10," said Clemenceau.

But America had lent a lot of money to the French and English; they had to listen politely, even if they thought Wilson was a fool.

Now, China has the money – the biggest pile of dollars in the world. And soon it will have the most powerful economy. It won’t be too much longer before Chinese leaders will want to throw their weight around. And they’ll have plenty of pounds to toss wherever they want. There are only 5 girls for every 6 boys. By the time China has the world’s largest economy, it will also have 30 million young men who cannot hope to find a wife. What will they become? Soldiers! Then, China will have the world’s biggest and most modern military…and a keen desire to show the rest of the world how things should be done.

How do you say, "We surrender" in Mandarin? We don’t know, but the Pentagon may want to look it up, just in case.

But don’t worry, that’s still a long way away…with many a slip betwixt the cup and the lip. Oh yes, China is headed for trouble too…you can’t have that kind of growth without trouble. In some ways, China is the biggest bubble the world has ever seen – bigger than dotcoms… bigger than U.S. housing…bigger than credit, finance and derivatives. Not only is it expanding rapidly – it MUST expand or it will blow up. Like a credit bubble, it can’t rest…it can’t stand still. If it stops expanding…bad things happen. In a credit bubble, people need more and more credit to service the bad loans and bad investments they’ve made. If they don’t get more money, the credits go bad. Businesses go belly up. People miss their payments. Loans get marked down. Pretty soon, you have a recession…or worse. China’s bubble is far more dangerous…because it has hundreds of millions of people who have come to depend on high rates of growth. They can’t stay where they are…they’re not peasants anymore. They’ve moved to the cities to join the international proletariat; they need work! They need progress! They need to build giant roads and aqueducts…airports and factories. They need to produce more things. They need to contribute to the global economy. They need jobs. And if they don’t get them, China could blow up. What’s more, China’s economy is run – at the very top – by officials who are even more blockheaded than our own. If trouble fails to find them; they’ll find it.

What caught our eye was a chart of China’s oil use. Ten years ago, China imported 165 million barrels of oil per year. Today, the total is more than 1 billion. What does it do with all that energy? It grows…it develops…it chugs…it thumps…it soars.

Looking at the photos (we haven’t been to China for more than 15 years), the replace reminds of a teenager – sassy, obnoxious, and outgrowing his pants. It is an adolescent nation, growing so fast it must eat all the time. In addition to the oil, China has opened 229 new coal-fired power plants since 1990.

Wonder why the price of oil hit a new high last week – above $126 a barrel? Well, China is a big part of the answer.

And rice is now selling for twice as much as did last year. Could that too be blamed on China? Well, partly. When the Chinese lived on the land, they fed themselves with what they produced. But once in town, they become more customers for the globalized market…competing for their daily bread with people in Des Moines and Dubrovnik.

You’ve heard the expression about land – ‘they’re not making any more of it.’ Well, in China, they’re actually losing it. Since 1949, says National Geographic, China has lost one-fifth of its farmland to dust-storms, desertification, pollution and urbanization. Each year, the country loses more ground – an area approximately as large as the state of Rhode Island.

Let’s see, more and more people moving to the cities – hundreds of millions of them. Building factories…building houses…buying cars…washing machines…computers… More and more people competing for the world’s resources…less and less farmland…

Oh, we’ll do the math later.

*** Today’s a holiday in much of Europe – Pentecost. Between the secular holidays and the religious ones…that is, between the sacred and the profane…it is a wonder anyone gets any work done.

But here at The Daily Reckoning headquarters, we keep our eyes open, even on national holidays.

What we saw at the end of last week was the kind of day that suits us. The Dow dropped 120 points on Friday. The dollar fell. Gold rose. And oil…as mentioned above…hit a new record.

*** And throughout much of the United States, farmers say ‘rain, rain go away.’

Often too much rain can be just as harmful to a crop as not enough. And in this case, heavy rain across the country has caused the corn crop to run behind by a few weeks. Some farmers have no choice but to plant later, causing their crop yields to go down…and push grain prices up.

An option farmers have when corn planting is delayed is to switch some of their acreage over to soybeans, but even this is becoming increasingly difficult.

Kevin Kerr explains:

"One Resource Trader Alert subscriber told me that he ‘spoke to a family friend who farms a few thousand acres in Northeast Iowa yesterday, and he’s not expecting to rotate any corn to beans unless wet weather continues through this week. Even then, it’s pretty hard to get the right bean seed not to mention they’ve already fertilized for corn.’

"I heard this over and over again when I went on my spring farm tour. Farmers are locked in now, couldn’t switch if they wanted to. Input costs are so high they are even planting sections that aren’t underwater in order to just get something in the ground. At this point yields are certainly going to be impacted and there is no turning back or switching to shorter yield corn like a 90 day, or certainly not trying to switch to beans.

"In fact, I hear in some smaller rural areas seed and fertilizer dealers have been cut out and not even gotten what they were promised from their distributors, leaving many farmers without anything. This could be one of the worst years for farming in recent memory and at one of the worst times possible."

Commodity prices across the board have been rising in the past couple of months. We don’t know how long this trend will last – that is, the trend towards higher commodity prices and lower asset prices – but we give it a while.

That’s why you should take advantage of a unique offer Kevin is offering new subscribers to Resource Trader Alert: 3 free months of his service – no strings attached!

*** In China, people are working their way up – from the rice paddies to the packing plant…from the country hovel to the urban tenement. Soon, they will be moving to the suburbs and buying SUVs. Wait…they’re already moving to the suburbs. The National Geographic has a photo of a new suburban development near Shenyang. There are houses that look like they might be in a suburb of London or New London – with white picket fences, lawn chairs and satellite dishes. And what’s this…there are so many rich people eating at fancy restaurants in Beijing that a chef in the city already makes about as much as a chef in Manhattan!

In America, meanwhile, people are working their way down. We’re not kidding. Wages are stagnant. Prices are rising. At the end of the day, they have less spending power; they are poorer. Besides, it said so in the New York Times. People lose their houses…move back in with their parents…and put their stuff in a storage unit. Then, they either can’t make the storage payments…or they realize that the move wasn’t just temporary and they give up. Pretty soon, the auctioneers are selling the stuff.

Of course, they didn’t really need all that stuff in the first place. But getting more stuff is what life is all about…isn’t it? So they got it, and now they have to get rid of it. If only they could hold a yard sale in China!

*** There is nothing like a national election to make you despair, sourly, of America’s future.

"Oh, I don’t like Obama," said an American colleague on Friday. "He seems like a demagogue to me."

The comment took us aback. It had never occurred to us that a candidate for president could be anything but a demagogue. Some are better at it than others, of course. But how could you hope to win the votes of the yahoos and cornballs without stirring their dull roots with the warm spring rain of patriotism, larceny, and the terrorist bugaboo?

"But Obama’s message is so empty…so vague… He promises ‘change.’ Who can choose a leader based on that kind of promise?"

As we’ve explained in these columns, change is the one thing almost no American wants. They’ve all got their little places at the beach staked out…heavily mortgaged, of course…and now they’re desperately afraid that someone – the Chinese, or the Arabs, or the Fed – is going to kick sand in their face.

Still they listen to Obama’s speechifying as they listen to music, without pay attention to the words. It gently lulls them, calms them, reassures them. They’re confident that Obama, if elected, will do what any of the others would do – try to prevent change at all cost.

The latest Las Vegas odds say that Obama will be the next president. All we know about the man is that he has Paul Volcker for an advisor, so he can’t be all bad. But what probably makes him more appealing then the other candidates is the very thing our colleague dislikes – the vagueness…the emptiness of his speeches…the hollowness of his remarks. Having said little; he has said little to annoy them.

Until tomorrow,

Bill Bonner
The Daily Reckoning