Bad Unemployment Report Tangles Debt Deal
By Greg Hunter’s USAWatchdog.com
If the debt ceiling deal wasn’t complicated enough, Friday’s terrible unemployment report poured sand into the gears that ground negotiations to a halt. Nothing came out of Sunday’s meeting of Congressional leaders at the White House on resolving America’s debt crisis. Last week, the Bureau of Labor Statistics (BLS) said a paltry 18,000 jobs were created when many economists expected 4 or 5 times that amount. The “official” unemployment rate jumped up to 9.2%. That was all that was needed to polarize the Republicans and Democrats even more than they already were. One side says it does not want to raise taxes, and the other side says it does not want to cut spending. Both say it’s because of the bad economy. All will agree America is in deep financial trouble.
What a difference a day makes as the mainstream media gets it wrong–again. The day before BLS released its dismal unemployment numbers, it was widely reported that payroll company ADP said that private sector employment increased by 157,000. Good news, but hardly a dramatic turnaround. The U.S. needs in the neighborhood of 300,000 jobs a month for nearly 10 years to clear the backlog of the unemployed and underemployed. Yet, Reuters reported last Thursday, “With gasoline prices falling, automakers cranking up production and the decline in house values moderating, the dark clouds over the U.S. economy are starting to lift. The jump in private employment was the latest indication the economy was pulling out of its first-half slump, a view bolstered by better-than-expected June sales at retailers, but analysts still see only a modest recovery ahead.” (Click here to read the complete Reuters report.) How many times has the mainstream media gotten the “recovery” story wrong?
As I have been reporting for months, the economy is heading down, not up. Economist John Williams from Shadowstats.com said in his latest report government accounting gimmicks made the economy look better than reality. He says, “The weak data—now rattling the markets and consensus expectations—reflect some catch-up from the extremely poor quality of economic reporting in recent months. . . . The current intensification of the economic downturn is real, but the happier news of late-2010 simply was not as strong as earlier indicated.” And as far as the “official” unemployment number of 9.2%–forget it because it is a big fat statistical lie. The number for the real unemployment rate for 2011 right now jumped to 22.7%! (if unemployment was done the way BLS did it before 1994.) Williams goes on to report the new number of people out of work is, “the highest level seen in the current, protracted economic downturn.”
So, the economy is, without a doubt, in the tank. Now, there is talk of cutting the size of the debt reduction deal to around $2.5 trillion over the next ten years, down from the optimistic $4 trillion. That’s just $250 billion a year in reductions. With $1.5 trillion in annual budget deficits, that still leaves way more than $1 trillion in red each and every year as far as the eye can see. I know this sounds crazy, but what I just described is a rosy scenario. Interest rates are bound to rise and growth will surely be slow, if not nonexistent. And let’s not forget “Obama Care” which will, no doubt, cost way more than projected because Medicare sure did. This will all add trillions of dollars to the deficit, far beyond the $2.5 trillion in reductions.
The way I see it, the U.S. passed the financial fork in the road a long time ago. Military spending is out of control, and yet Congress does not even mention it. No one on the Sunday talk shows asked a single question about it. Bank bailouts continue, and not a word about that sacred cow either. The debt ceiling is being raised some $2.4 trillion in part to pay off the toxic mortgage debt that big Wall Street banks crammed into places like Fannie and Freddie. Bank of America was forgiven $127 billion in sour mortgage debt at the beginning of the year over at Freddie Mac, and neither party will utter a peep. When the debt ceiling passes, the other Wall Street banks that pawned off toxic mortgage-backed securities will be getting the same deal. It is outrageous there is not a single indictment of any New York banker—just more bonuses!!!
Ayn Rand once famously said, “You can ignore reality, but you can’t ignore the consequences of ignoring reality.” The consequences of reality are America is already in deep trouble, and so is the dollar. Even if a debt deal is reached in time to avoid the August 2nd deadline for debt default, the U.S. economic quagmire is profoundly negative for the dollar. Ultimately, it is the dollar’s buying power that will suffer, and as it declines, so will the standard of living for most Americans. I pray the buck does not fall off a cliff, but in today’s world, that is a definite possibility.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
The entire system is corrupt. The countries are owned lock, stock & barrel by the bankers and the politicians are the pawns in cruel system to drain the people of their savings, safety and security. All of this plotical posturing is a big game, the politicians are owned by the special interest and the banks.
The sad thing about the entire mess is there is nothing we the people can do about it.
It is by now clear beyond any question that the sole purpose of the United States government is to extract wealth from the people and transfer it to the Banks. Everything else is a distraction.
Frank,
Agreed!!
Greg
Jan,
Take heart. There is something that we the people can do rather than sit back and take the abuse. If I may quote Napoleon Bonaparte: Une Revolution est une idee qui a trouve sa baionnette. It is time for us to find our bayonets. Like it or not, history tells us these things generally come to an ugly head.
There is something you can do. Stop using the banks’ money and stop letting them control IT annd YOU. Use bitcoins.
Hey Greg,
Nice article. I thought you might have a little fun playing around with Google’s Public Data Explorer and Unemployment numbers – http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&ctype=l&strail=false&nselm=h&met_y=unemployed
http://www.google.com/publicdata/directory
Welcome to the new norm in the U.S. economic landscape – at least for the next couple years.
Having lived in Europe and experienced their economy, I have been telling friends to expect a European type economy… High food and energy prices, high unemployment, higher regulation, lower GDP.
We are becoming like the PIIGS of Europe, and Canada is the Germany of the western hemisphere- for a while anyway. That is until a deal is made to revalue and replace our currency.
Look at the Canadian dollar today. It will need to get to 1.20 to be fairly valued and then a new Western currency will replace it for the hemisphere.
Careful though if you are tempted to apply Canadian socialist policies to the U.S. They have a much more homogenized population. What they do have that we need and would work well for us is a much more self interested foreign policy, and a more conservative central bank lending policy.
They are not re-building schools in foreign lands destroyed by their own military while their own infrastructure crumbles.
The only chance we have now is to elect leaders with foreign policy and federal reserve animosity like Ron Paul/Rand Paul.
I know that does not sit well with war hawks like you Greg, but it must happen.
Hoppe,
“War hawks like you Greg”–I just pointed out if the current article that Congress is not even talking about military spending and the mainstream media dose not ask a single question about it on the Sunday talk shows. If I say military spending is “out of control” how does this make me a “war hawk?” I don’t see how you can say that. Thank you for your comment though.
Greg
My apologies Greg for a typo and maybe mis-understanding you. I meant to write ” not sit well with war hawks you like Greg.” That comes from my recollection of your years at CNN and ABC times when you covered Iraq, and the hawks, who I thought you were soft on.
Sorry for the confusion.
Hoppe,
No problem. FYI, I did a story on the dangers of depleted uranium munitions and the problems it cause for our own service men while at CNN. It is on the site in the “About” section. I confronted the military in the Pentagon about the adverse health effects and said “Iraq was a radiological sewer.” My main job at both networks was uncovering rip-offs and fraud. I never really covered the wars and military. Thank you for your comments and for supporting this site. You are welcome here anytime.
Greg
I remember that. In fact , I sent it to a friend who was an army surgeon in Iraq at the time. He didn’t want to hear it, like so many in the military, and like I was during Viet Nam.
Greg,
The consequences of our economic reality are coming full circle. Just last year on June 13, 2009 U.S. Treasury Secretary Timothy Geithner said “the United States was committed to bringing down its fiscal deficits quickly to a sustainable level, starting in 2011, and would work to reduce long-term health care costs that are adding to deficits.”
Now, thirteen months later on Sunday, July 10, 2011 Geithner stated on NBC’s Meet the Press that it’s a very tough economy. He says that for a lot of people it’s going to feel very hard, harder than anything they’ve experienced in their lifetime now, for a long time to come.
It appears our Congressional leaders solutions are just more of the same nonsensical problems that got us into this outrageous mess. Maybe they should study what Albet Einstein taught us, “Insanity: doing the same thing over and over again and expecting different results.”
Thank you Baja and Art.
Greg
Greg, best article you have written yet! Seriously, I mean it, not just blowing smoke. I believe you finally have had enough of the bull from Washington and realize we have past the tipping point of a turn around. One trillion in debt deficit each year even if a deal is reached is not a deal, its an outrage. $250 Billion reduction a year in spending, pocket change! Our esteemed duly elected Washington
boys and girls know we are past the tipping point as well. This deal will give them time to get their pensions in place, get re-elected a couple of time more before they bail out to their offshore villas.
greg. thanks for your articals. i look foward to them, and would like to see more..lol daily?
id like to see one on what you think would happen if the dollar falls of the cliff.
and one about what will happen if we continue to thump the can around the table. seeing we cant kick it down the road anymore.
Thank you James and Francisco for weighing in with your valid perspectives!!
Greg
Greg—- just remember this! We went from the New Deal to the Raw Deal”- Be sure and check out on U-Tube Bill Still’s video titled:The Secret of Oz- its a must see!
Thank you norm for the comment and tip.
Greg
norm,
thank you. i actually watched the film from beginning to end. brilliant!! this is a must watch for anyone who wants to understand the history of fractional banking and it’s influence over out political directions. i thought i knew what was going on, i wasn’t wrong. but now i can say that i understand a lot more.
btw. you should have left a live link. so i’ll do it for you.
http://www.youtube.com/watch?v=7qIhDdST27g
all the information in one place, attainable in just under two hours!
spend the little time. it is well worth it. you may rethink gold and silver. so, beware. never heard of bill stills before today. now i won’t forget him.
Greg,
A lot of American folk are ignoring reality. They listen only to the mainstream media – I call them the alphabet networks – ABC, CBS, ect.
There is way too much apathy among otherwise intelligent people.
I just to not “get it”!
The eyes of these people will open eventually – but I fear it will be too late.
I am very concerned for the future of my children and grand children.
What will their standard of living be? What will their lives be like?
Mike
Yes Mike you are right on target when you say, “The eyes of these people will open eventually – but I fear it will be too late.” Thank you for weighing in.
Greg
I agree with everything you just wrote in spite of the fact I am not an American. I am a Canadian. Up here, like down there in the United States and throughout the world are mature, sophisticated educated men and women who take high pride in the art of sophistry [misrepresenting the truth]. These souls operate unchecked on all levels of Government, in the mainstream media, and in the professions such as Law, Accounting and Banking.
Not a day passes by when, once again, we are provided with some new startling scandal – when the real facts bubble to the surface. known.
Maybe USA Watchdog should create, produce and present a Masters Degree in Misrepresentation to all those who practice this skill without shame or guilt. Many of these people clearly are sociopaths. How do you deal with them ? Public exposure is the only remedy. Thank you. Keep up the good fight.
Thank you Mike for your kind words and commnet.
Greg
Greg, you continue to sound the alarm with your chilling editorials and your truth stinging commentary. Your regular readers are right with you and truly appreciate all you do. It is those who are oblivious, who are yet to be personally touched by the circumstances, who need to hear and contemplate your words. I share your missives with many people, friends, and family. Precious few, however, wish to hear anymore or welcome further discussion. Our generation has known nothing but prosperity, comfort, and predictability, and your concerns and stark translations are simply more than their experience can comprehend. I believe it will take a powerful and stunning wake up call, right between the eyes, before the masses are moved to action. If we’ve already passed that last exit, I don’t even want to imagine the traumatizing fear that could set in when reality finally hits. May God be with us. Thank you, Greg, Dan McCartney
Dan McCartney,
Thank you for your comment and for promoting this site. I feel sorry for your friends. To borrow a line from my most recent story, “Ayn Rand once famously said, “You can ignore reality, but you can’t ignore the consequences of ignoring reality.” The consequences of reality are America is already in deep trouble, and so is the dollar.” There are going to be repercussions for what our leaders have done and it will be sooner than most can imagine. Please take this time to continue to prepare and protect your family.
Greg
Great article as usual, Greg. Here’s the kicker: 9 out of 10 mainstream “financial experts” believe the US has no choice but to raise the debt ceiling before August 2nd…stating that to do otherwise (ie., declare bankruptcy) would have dire financial consequences. Which begs the question: “Isn’t the US already bankrupt??”
Richard,
Yes, we are technically bankrupt because we have way more debt than we can ever pay back. We gain a major advantage by supplying the world’s reserve currency, but that will change. When it does, look out for exponentially higher prices. This is probably why millionaire Steve Forbes and others are predicting the U.S. will be back on the gold standard in 5 years or less. We will need to go on the gold standard to get trading partners to accept the dollar as payment. Thank you for your comment and participating in the discussion here.
Greg
Great article Greg! Haha, although I think to say that the buying power of the dollar suffering as a result of the feds now totally naked abuse of its supply is a wee-bit understated.
I’m guessing the dollar will soon be viewed with complete hatred and utter contempt as many of us awaken to realize that for decades it has been the instrument used to steal from us the fruits of our labor……..
Brian,
At this time, most international commerce including oil is done in dollars. However, I agree at some point the dollar will be “viewed with complete hatred and utter contempt.” Of that there is no doubt. At this point it is simply a timing issue. Thank you for your comment.
Greg
Hello Greg,
I keep up with the latest financial and economic news from sources such as yours which I find to be the true facts and not airy fairy as presented on the MSM. With all these financial and economic events all happening at the same time, it appears that we are headed to a perfect financial and economic storm same as what proceeded the Great Depression and World War II.
Thank you Richard for weighing in and supporting the site.
Greg
You mentioned that defense spending is not even mentioned when all the pundits and government stiffs discuss trimming the deficit. The fact that the U.S. spends as much $$ on defense as the rest of the world combined seems to be no big deal to these crats. That U.S. troops are stationed in just about every conceivable place that a foreign nation will accept or tolerate them is the status quo and not even given a second thought. All the “logic” brought forth supporting our far over-reaching military presence simply perpetuates the belief that it MUST be this way.
The United States is an empire in it’s twilight years. Like many empires before it, the system will continue to (dys)function until it collapses, much to the shock and awe of the public at large and the government types that keep pushing the string forward.
Can’t wait til 11,000 NASA folks lose their jobs in Florida. I wonder how that will be reported in press? “Rocket Scientist Launches To Burger King Manager” without collecting his first unemployment check. How’s that for job creation?
interesting Greg, I was wondering ??? How much has been paid out to buy back debt VS interest paid ?? Or is the governemnt just making interest payments and only maturing debt? I was wondering exactly how the numbers work? And what debt is really due on a graph and a graph of the interest and another overlay of completed maturing debt that is dropping off the debt books?
as per the unemployment rate I read Shadoestat’s John Williams often and he is right on the money…
as I have posted before the biggest issuses I see in the economy are low wages and I will add now that thin profit margins caused by the unfair competition by giant merchants who conquer with economies of scale and price setting.
Mitch,
I think nothing has really been paid down on the debt since 1971 but I could be wrong.
Greg
good morning Greg, I found some info on the debt/repayment and ineteest accured ….. I will email the link and lists to you because I am just starting to look at them and I don’t have the experience or resources to quickly understand and break apart the real numbers.
http://www.treasurydirect.gov/govt/reports/pd/pd.htm
Mitch
Thannk you Mitch.
Greg
Hi Greg,
Great article, makes things very clear and easy to understand. I believe the only reason that Geithner and Bernake are beating the financial Armegedon drum is because if the debt limit does not get raised, their very profitable ponzi scheme comes to a halt. If they can’t issue debt and collect the interest, they are out of business. Let it be so.
Thank you Vic and Jan thank you both for your comments and support.
Greg
Greg,
One class of the unemployed that is not even counted is the small business owner who has gone out of business. I know several, no unemployment benefits to help them.
The low wage jobs available are often less the the unemployment benefits. I think many people are going to draw every dime in UI they can and do odd jobs under the table. They know they cannot make it on minimum wage. I we will see the beginning of the end when the 99 weekers run out of benefits.
Nice article once again Greg. Spot on commentary.
Politicians and bureaucrats deluding themselves once again on the state of the nation with dubious official data.
Well you are never ever going to solve a problem by failing to define it. I’m sure many of them have even begun to believe much of the nonsense their own professional spin doctors promulgate to make poor results sound acceptable.
As for the debt ceiling, of course it will be increased because without it either the US defaults on some debt payments (a catastrophic scenario nobody wants to contemplate) or there will have to be immediate deep draconian spending cuts. Sadly, the US needs to borrow more just to finance its current borrowings if it retains its unsustainable current spending levels.
You would not want any of these guys running your business would you?
Not a chance Sean because they would surely bankrupt it.
Greg
“official” unemployment rate jumped up to 9.2%.”
One of the largest lies told by government.
Igor,
You got that right!
greg
Like a bad Hollywood remake.
Like most any Hollywood remake, the second or third in a series is always worse than the first. And so it goes on. The fun in Europe just never stops. Just when the banking and political elites had thought they had bought some breathing space with the passage of the on again off again interim bailout package for Greece along comes the Spaniards and Italians to gum up the works. Sadly the situations in Portugal and Ireland haven’t improved either but in the bigger picture appear small compared to what’s coming with Spain and Italy.
First, and almost as a side note, we get some of the Spanish provinces announcing that they are finding that their deficit conditions are almost twice as bad as previously reported. (Read their Credit Default Swaps are going down the toilet.)
Next comes corruption plagued Italy’s banks sinking faster than the Lusitania. They started collapsing so fast that trading had to be halted, only to resume once the markets were reopened. The replay of the Greek delusion that all could be settled with austerity packages and a few bond buy backs at below at below par blew up even quicker than it did in Greece. It seems those pesky rating agencies just won’t stay bought and informed the ECB and the IMF, not to mention the public that doing so would simply be default by another name. They can put all the ribbons on this steaming pile they want, it’s still going to stink.
Add in the new IMP President opening her mouth and saying that “nothing should be taken for granted on Greece” and the next thing you know the Euro drops back below $1.40 for the first time in a year. What more could possible go wrong? Oh that’s right Germany’s Angela Merkle said that any expansion of the existing €500 Billion at Germany’s expense was off the table.
(Chart available on my blog)
Hey I’m just an engineer but I still think €376.7B + €624.8B = €1001.5B is just a tad bit larger than €500B.
Gee I wonder why the price of gold is again approaching its all time high in Dollars and has already passed it in Euros. The real kicker in the PM markets though is the price of silver. While gold and the Swiss Franc again soar, silver remains in the summer doldrums to say the least. Guess these poor fools have bought the line that silver is just a mere commodity and not real money. Meanwhile inventories plunge and naked manipulation and price suppressions goes on at an accelerated pace. Just as the bankers and politicians solution to debt is more debt their solution to being naked short in silver is to go even farther naked short. It’s reached to point of hilarity.
Look at this chart for July 11th and try to tell yourself that this is not manipulation. While you’re at it click your heels together three times and you might find yourself back in Kansas too.
(Picture available on my blog)
Just another opportunity to buy as far as I’m concerned. When the bill comes due the price will explode to $200 an oz. and then will be seeing who is sitting fat. Hint: It won’t be JP Morgan or HSBC.
Never mind, the one thing you will be able to count on is that the Central Banks will continue doing two things; churning out more propaganda to keep the view blurred and confused and continue using those piles of newly printed currency notes to buy hard assets to protect themselves from the growing debacle that they created, while everybody else’s situation only gets worse. Hey maybe I should go long on pitchforks and torches as a side investment.
Davis,
This was very good!
Greg
1971 , need that money printing to support the War spending. Once the the boys come home from the wars the War makers who profit, now want inflation to stop. Same old stories. Living with inflation is just part of the U.S. War system. You best plan on inflation, it’s the only game the D.C. two party system has. They only fight over who’s friends will get the printed money. The best thing a person can do is not get them BAL-S SHOT OFF IN SOME WORTHLESS WAR.
Mr. Hunter;
If you read Bloomberg’s July 12, 2011 story ” MURDOCH CALLED FOR PARLIAMENT HEARING ” [I’m sure you have read it by now} you will see and conclude that our so-called “leaders” are nothing other than well dressed, well educated, sophisticated sociopaths.
The great English writer and wit, Dr. Samuel Johnson, said this several centuries ago ” INTEGRITY WITHOUT KNOWLEDGE IS WEAK AND USELESS BUT KNOWLEDGE WITHOUT INTEGRITY IS DANGEROUS “.
Again, thank you.
Very good stuff Mike! Thank you.
Greg