Archive for May, 2011

We received the report today that the number of people that filed for unemployment last week fell to 409,000.  The Bureau of Labor Statistics still maintains that the unemployment rate remains at 9%.  It is interesting though, how their calculation deceives.  In order to see this deception, we must go directly to the source, the BLS Unemployment Report.  The unemployment rate is issued monthly by the BLS, and usually comes out within the first week of the month following the subject month.  The last report that is available for analysis is the April 2011 BLS unemployment report, so let’s start there. 

As you begin reading this report, you will see some statistics, of course always starting with the number of “unemployed persons”, followed by the current calculated unemployment rate.  In this report, the number of unemployed persons stated is 13.7 million, and the unemployment rate is 9%.  They are basing their analysis on a total labor pool of 153,421,000 people.  They arrive at 9% simply by taking 13.7 million divided by 153,421,000.  Sounds simple right? 

The first paragraph is followed by a series of additional paragraphs identifying different group of people.  These groups are: number of persons unemployed for less than 5 weeks, number of persons unemployed for more than 27 weeks, number of persons employed part-time for economic reasons involuntarily, and finally the number of person marginally employed (meaning discouraged workers no longer looking for work).  In prior articles, I’ve mentioned how our unemployment rating system had changed during the JFK administration, to no longer include part-time workers looking for full time work, or discouraged workers.  In researching the charts provided by the BLS, I’ve made another discovery.  The BLS is also NOT INCLUDING people unemployed less than 5 weeks, or people unemployed for more that 27 weeks

Let’s look to BLS A-12 Unemployed persons by duration of unemployment– for April 2011.  Looking at the “Not seasonally adjusted” numbers, you can see that if you add the numbers representing the unemployed between 5 and 26 weeks, we approximately come to the 13 million figure that the BLS is using as  the number of unemployed persons for the month of April 2011.  But what about those unemployed less than 5 weeks or more than 27 weeks?  When we include everyone that is unemployed on this chart, we come to 21.671 million unemployed- a bit different from 13 million.  This alone would bring official unemployment up to 14%. 

If we want to compare current unemployment with Great Depression Unemployment, we’d have to add part-time and discouraged workers to the count.  Assuming these numbers are accurate, there are 8.6 million part-time workers looking for full-time work, and there are 2.5 million discouraged workers.  This would bring our unemployed count to 32.771 million people.  Again assuming that their numbers are accurate, this gives us a true unemployment number of 21.36%.  As you already know, Great Depression unemployment peaked at 25%, and we are not far from it.  In my opinion, given the fact that there is an intentional manipulation of statistics to deceive the average American, I really don’t trust their numbers.  Based on the fact that we are losing over 400,000 jobs per week for the past couple of years, and we have been creating between 100,000 and 250,000 jobs per month, I’d estimate we are close to, if not already at 25% unemployment.  If we analyze the total number of Americans that aren’t working against the total noninstitutional population of 239,146,000, 49.5% of the population is currently unemployed.  Almost ½ of Americans are sitting at home (this includes children). 

There is no end in sight for our unemployment problem.  Either by a raise in interest rates, or rising inflation- the economic outlook for new jobs in America is dark at best.  We will witness over the next couple of years unemployment that will easily surpass the unemployment of the Great Depression.  There are so many conflicting articles out there presently, some saying we are seeing a recovery with a positive outlook, others saying the economy is stagnant.  When we examine the facts, there has been no policy change to reverse the mistakes of the past 10 years.  It is insanity, by definition- doing the same thing over and over again but expecting a different result.  I encourage you to examine the reports issued by our government closely.  Our reality is being concealed intentionally, and historically we can deduce that it is for political reasons.  Pay attention, scrutinize, analyze, and strategize.  That’s all I have for today. 

BLS April 2011 Unemployment Report

Table A-1: Employment Status of the civilian population by sex and age

Table A-12: Unemployed persons by duration of unemployment

-John F. Haettich- 5/19/2011

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I just wanted to comment quickly on news coming from the Federal Reserve today.  News came from Bloomberg that the Federal Reserve policy makers favor raising interest rates as a major part of their strategy to reverse all of the recent stimulus and QE that has flooded the market.  This gives the “every day reader” the impression that they are going to allow QE2 to end, and that they will be raising interest rates in the summer.  There is however a “hint” if you will, to what will really happen.  In the article it is stated “Crude oil prices and financial market inflation expectations have receded since the April FOMC meeting, reducing pressure on the Fed to exit.”  More simply put- they may use the recent dip in commodities prices as their proof that inflation isn’t a problem, allowing them to initiate QE3 with plenty of reason. 

What they fail to mention, is that even with this drop in commodities prices over the past few weeks, commodities prices still remain anywhere from 5% to 120% over last year.  I see this press release as a primer to downplay the true inflation that has occurred, in preparation for the initiation of QE3.  Keep in mind, without QE3, we will see a market crash like we saw in 2008, if not worse and as we all know, that is bad for politics as usual. 

It is my belief that we will see continued reports downplaying true inflation in preparation for the continuing of this bond buying program.  The government continues to fail to balance a budget, in addition to their failure to remain under the debt ceiling- all contributing to our addiction to QE.  I ask every reasonable free thinking American- what’s the point of this debt ceiling?  There is no ceiling, only an elevator.  Any fool can see that it’s purpose is null and void, besides creating a psychological comfort boundary. 

All of this talk from the Fed will continue, until the final announcement of QE3, stimulus, or whatever they decide to brand it.  We may actually see it come out under a new name so as not to associate it with what it actually is.  Time will tell.  That’s all I have for today. 

-John F. Haettich- 5/18/2011

Looking at commodities markets, they seem to be calming from their rapid rise of the past few months.  This has many on edge trying to figure out what exactly is happening.  Everything is looking calm and uncertainty seems to be the only certainty.  We heard today that inflation rose by its fastest numbers since 2008, coming in with a CPI of 3.2%.  This still is inaccurate as inflation has been increasing at a much higher rate than indicated, and cost of living continues to skyrocket.  Let’s analyze what is happening. 

Commodities over the past two weeks have seen a major correction, but why?  The CME Group, this is the Commodities Exchange Group, raised its margin requirements by 80% over the past couple of weeks.  What does this mean?  It means that they have raised the amount of money required to control a full sized contract of silver, gold, etc. by 80%.  Requirements were raised four times in the week of the commodities slide alone.  What this tends to do is squeeze out smaller speculators that are in the market, as they don’t have the liquidity to meet these higher margin calls.  This causes a sell off, and along with these sell offs, stop losses kick in for many investors which accelerates a massive sell-off.  The smaller guys are in essence being squeezed out of the market for some reason.  This helps to explain the phenomena we witnessed over the past couple of weeks, but why is everything so stagnant?  Why the volatility?

The only thing that I can see that is causing this volatility, is an apprehension of what is going to happen next month with quantitative easing.  To believe that the bull market for metals and commodities is over, is like believing that the US Dollar is about to repair itself magically in spite of the conditions that have caused and continue to cause its decline.  As you know, the Federal Reserve’s QE2 program ends in June of 2011, but our problems are just beginning.  Our government remains in a deficit situation requiring loans to operate, and the Federal Reserve is buying 70% of these treasuries through QE programs with interest rates close to 0%.  The Federal Reserve has not indicated yet that they will continue quantitative easing, but they haven’t taken it off of the table.  The only other option, which is raising interest rates to attract new treasury buyers, will only put the US in an even worse situation where we can’t even pay the interest on our debt, and it will freeze up markets, cause a stock market crash, slow consumer spending and put us into a depression tail-spin.  The outlook is bleak, and the storm is on the horizon. 

Should the Federal Reserve come out in the next few weeks to indicate that they will continue their QE program into a QE3, you will see the commodities market again march towards the sky.  Based on the historic decisions of Ben Bernanke, I believe that he will most likely choose this option.  The down side to this is that we will see inflation hit a point where it will be on the verge of “out of control”.  Price increases will be significant across the board, and cost of living will be unaffordable for the average American as a result over the next couple of years.  Businesses will end up closing their doors as they can’t afford the rising prices either, causing unemployment to surge even more so than it has.  These are difficult times, and they will require knowledge and understanding for safe navigation. 

There was another report out today in CNN Money entitled “Could the dollar lose its status?”  Pretty interesting that even mainstream news is reporting on what has been reported for over two years in international news, the end of the dollar as the World Reserve Currency.  The result of this would be disastrous for the US Economy, as we will no longer be able to export our dollars.  The report indicated that even China is diminishing their US Dollar reserve holdings because they see the writing on the wall.  Everyone in the world is aware of this, except most Americans?  What a tragedy, and all of this could have been avoided by using sound monetary policy.  At the same time, reports today from the IMF indicate that the Euro isn’t out of hot water either.  Even after the bail outs of Ireland and Greece, there is again warning that the Euro may be seeing some major problems on the horizon. 

For those in commodities, now is not the time to sell.  This is the time to buy.  These prices will continue to increase as we haven’t even seen the full effects of QE2 yet in the markets.  You will see corrections from time to time, but you must look at the economic fundamentals involved- the big picture.  You must see where all of this is heading, and make your moves accordingly.  Now is probably the most opportune time left to buy Silver and other commodities at lower prices.  The storm is coming- the world sees it, the wealthy see it, the government knows it, and now is your time to become educated on it.  All eyes are on June and the end of QE2.  That’s all I have for today. 

John F. Haettich-  5/13/2011

 

Many of you have heard the report today, that the first time unemployment filings hit an 8-month high for week ending April 30, with 474,000 people filing for unemployment in one week alone.  This followed a report yesterday that the private sector is growing slowly, adding somewhere around 170,000 jobs for the entire month of April.  You can see the obvious imbalance.  We continue to lose over 400,000 jobs per week, while creating 170,000 jobs in an entire month.  This is again more clear evidence of the deceptive manipulation of GDP numbers that are being issued by our government.  I again argue, we aren’t even in the positive on GDP, but rather our economy is shrinking right before our very eyes.  The question is, when do the American people say, “Enough is enough.”

The American people have turned a blind eye towards the corruption and blatant mismanagement of our country.  The passions of our forefathers including freedom, liberty, faith, and good will for all men has been drowned out by filthy television programming and an intentional dumbing down of our morals and ethics.  Many are no longer even able to determine right from wrong, but rather have been educated that everything exists in a gray area.  It’s no wonder corporate America along with our government has been able to get away with murder. 

We’ve seen the market slump over the past week across the board, and this news of an 8-month high for first time unemployment filings isn’t going to help the stock market any.  It is a bit unnerving that even with the easy money policies of the Federal Reserve; our markets still aren’t stable at all.  GDP continues to lag far below where it needs to be, true inflation is much higher than the Fed will admit, and unemployment is clearly a much bigger problem than the government is willing to come to terms with.  Silver continues to lag, but I think we’ve seen the bulk of the correction and I expect it to reverse direction soon.  Keep in mind, in a highly inflationary situation, silver is one of the best assets to hold historically.  The economic atmosphere has not changed, and because it has not changed certain things become very easy to predict. 

In other news, I read an article today in Al Jazeera’s English news, entitled “The global economy’s corporate crime wave.”  It was interesting to see how closely this corporate and government disease of corruption isn’t contained, but rather has infected the entire world with no country left untouched.  A main point of the article alluded to the fact that larger countries often point out the corruption and bribery that takes place in poorer countries, while denying the truth that most of this corruption has filtered down from richer nations.  Fast and easy money has become a global epidemic infecting the rich of every country, and has created the largest income gap in world history. 

News from China is also eye opening today, as they are reporting that their central bank is pumping less liquidity into the market as investors are pouring in from other countries.  More simply stated, they are slowing down on their quantitative easing practices/ they aren’t printing as much money as they were.  This means one thing for us in America, the Yuan will be rising against the dollar steadily until eventually it rises above the dollar leading us down the road of even higher prices when purchasing their goods here in the US.  There is also news coming from China that their banks are starting to tighten their lending practices.  This tells me that their banks are getting smarter.  This tighter monetary policy is probably the wisest move the Chinese can make, but is not the best news for us here in America.  As they continue to tighten their monetary policy, brace yourself for an additional increase in the rate of our already high inflation. 

Again, the truth is in the numbers.  The government can hide true unemployment, GDP, and inflation numbers only for so long.  Eventually Americans will wake up without jobs, savings, property, or the ability to independently take care of their families.  Tune in this Saturday at KRKS FM Denver at 2PM for part two of my recent economics interview.  Also tune in soon for an analysis of world oil & gas supply and demand, and an analysis of the current Federal Reserve Board of Governors and Barney Frank’s proposal to eliminate privately elected voting members.  That’s all I have for today.

John F. Haettich- 5/5/2011

 

I’m sure many of you that hold gold and silver are getting a little nervous.  We’ve seen Silver this past week go from almost $50 back to $40 with significant speed.  My advice to you, is buy more silver especially now while it is cheap.   It may come down a little bit more, but it is going to be surging far north of $50 in the near future.  Many of you may be confused as to what is happening, so let me explain. 

Silver is in a bull market for one main reason, and that is a weakness in the dollar caused by the actions of the Federal Reserve.  Because of this bull market, many speculators were drawn into the silver market as it is definitely attractive to any investor paying attention to the markets and looking for quick gain.  So why the drop in value?  It’s simple- there has been a big sell off.  My guess is that many of the speculators that had jumped into the market to make a quick buck have decided to sell, especially as the price scraped an all time high not seen since 1980.  This doesn’t change the fact that silver and all commodities are continuing in a bull market.  When you look at any bull market, there is no investment that sees a straight line up without corrections here and there.  What you are seeing in silver is simply a correction. 

Due to weaknesses in the dollar, I highly doubt silver would ever go below $30-35, but I can say with confidence that it will go beyond $50. Regardless of speculators, the prices of silver, gold, oil and other commodities are going up.  Speculators have always caused volatility in the market, and that will never change.  Be assured, silver will continue to trend upwards, and it would be a mistake to sell at a time when it would be wiser to buy. 

Also understand this is not the bursting of some “silver bubble.”  In order for there to be a bubble, massive amounts of people would have to be investing in it.  As we saw in the mortgage bubble, Americans were getting loans in mass quantities whether they could afford them or not.  To date, I know very few Americans that hold gold and silver.  The average American still has no understanding of the purpose of these precious metals, and many don’t even know that gold and silver are soaring when asked.  Those that will tell you that this is the bursting of a bubble simply don’t understand what a bubble is. 

As long as the Federal Reserve continues to create money which is by definition inflation, the dollar will decline and the prices of commodities will rise.  The upside for gold and silver is huge at this point, when compared to the downside potential.  Do not be fooled by the volatility created by speculators, but rather analyze the economy as a whole and understand why prices are going to rise.  It is interesting that the rally from $40 to $50 happened on a week when Ben Bernanke decided to speak, go figure.  Every time he speaks, precious metals prices rally.  Regardless, no worries, all economic signs point to a continued bull market for these metals, and an opportune time to buy.  That’s all I have for today. 

John F. Haettich- 5/4/2011