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US Jobs Flim-Flam

Someone should do something? Like the Fed hasn't done enough already...?
 
LAST FRIDAY, the Labor Department released a shockingly weak March jobs report, writes Bill Bonner in his Diary of a Rogue Economist.
 
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.
 
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.
 
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 favorite 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?
 
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 has co-authored a number of New York Times Bestsellers including Financial Reckoning Day, Empire of Debt and Mobs, Markets and Messiahs. In his own opinion, Bill's most recent title, A Modest Theory of Civilization: Win-Win or Lose, is his best work yet. Bill also founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group have exposed and predicted some of the world's biggest shifts since that time, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and more recently the election of President Trump.

See full archive of Bill Bonner articles

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