By Robert Reich, Robert Reich

What passes for business reporting in the United States is too often a series of breathless reports about the stock market. When the Dow rises precipitously, as it did today (Wednesday), the business press predicts an end to the Great Recession. When the stock market plummets, as it did last week, the Great Recession is said to be worsening.

Pay no attention. The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there’s no relationship at all. Over time, weather and geology interact but the results aren’t evident for many years. The biggest impact of the weather is on peoples’ moods, as are the daily ups and downs of the market.

The real economy is jobs and paychecks, what people buy and what they sell. And the real economy — even viewed from a worldwide perspective — is as precarious as ever, perhaps more so.

Today’s rally was triggered by news that one of China’s official measures of its growth – its Purchasing Managers Index – rose. The index had been in decline for three straight months.

Why should an obscure measurement on the other side of the world cause stock markets in New York, London, and Frankfurt to rally? Because China is so large and its needs seemingly limitless that its growth has been about the only reliable source of global demand.

Many big American companies have been showing profits because they’re doing ever more business in China while cutting payrolls at home. American consumers aren’t buying much of anything because they’ve lost their jobs or are worried about losing them, and are still trying to get out from under a huge debt load (the latest figures show more consumer debt delinquent now than last year and a surge in personal bankruptcies). The U.S. housing market is growing worse, auto and retail sales are dropping, and the ranks of the jobless continue to swell.

Europe is in almost as much a mess. The problem there isn’t just or even mainly that Greece and other nations on the “periphery” have too much public debt. A bigger problem is European consumers aren’t buying nearly enough to generate more jobs. Unemployment remains high, and the trend is bad. Manufacturing growth there has slowed to its weakest pace in six months. Yet bizarrely, Europe’s large economies – Britain, Germany, and France – are paring back their public budgets. It’s exactly the wrong time, and a recipe for disaster.

Germany’s so-called “job miracle” (as Chancellor Angela Merkel calls it) is more mirage than miracle. Most of the gains in employment there have come from part-time jobs, often at low pay. Average annual net income per German employee continues to drop. This explains why domestic demand there is so sluggish and why Germany is desperately dependent on its exports of machinery and manufacturing components to Asia, especially China.

Meanwhile, Japan, now the world’s third-largest economy, is a basket case. Japanese consumers aren’t buying much of anything, and why would they? The country is still in the grip of a deflationary cycle that shows no end. Japanese consumers reason if they can buy it cheaper next week there’s no reason to buy now. Basically the only thing keeping Japan’s economy going are its exports of cars and electronic components to China.

Australia is booming, but look closely and you see the same buyer. Australia is making a boatload of money selling its minerals and raw materials to China (Australia is fast becoming one big Chinese mine shaft). The Brazilian economy is soaring. Why? Exports of wheat and cattle to China. Middle East oil producers are getting richer. Why? China’s insatiable thirst for oil.

Elsewhere around the globe the picture is as uncertain. Much of Pakistan is under water. Much of the rest of the Middle East is under tyrannical or corrupt regimes. Russia has suffered such a dry spell it’s hoarding wheat. Despite its wealthy few, India’s masses are still terribly poor.

The stock market could plunge tomorrow or the next day because the world’s economic fundamentals are so precarious.

The global economy cannot be sustained by one big, voracious nation – especially one that’s suffering bouts of civil unrest, actively repressing dissent, suffocating under a blanket of pollution and coping with other environmental hazards, and whose biggest companies are run by the state.

More articles from Robert Reich….

The Daily Reckoning

Labor Greens Unite!

Change climate with carbon price

Parasitic kids

Well that’s a good sign. Not twelve hours after we went to press with our latest newsletter – highlighting how September is historically the market’s worst month – and describing a Long Depression, stocks in New York rally by almost three percent. How is that good sign?

The Bear had everyone feeling pretty bearish about him. You can measure this in the number of put option buyers or in surveys. But this morning, we went to Google Trends to see how many people were searching for what you might describe as bearish topics like, say, economic collapse.

Click here to enlarge

You can see that thanks to the publication of two fairly high profile stories that went live late in August by Forbes and CNN, the conversation on collapse got a whole lot louder in the echo chamber that is the internet.

This more or less proves that if you wait on the mainstream press to validate your own thinking, you’ll always be late. It’s only safe for the papers to report on something once everyone’s thinking about it, and by then it’s too late to trade it.

But just to be safe, we asked our own in-house trading guru Murray Dawes what he thought. He wrote back that, “There is the possibility that the market has been ‘caught short’. By that I mean that traders could be overly bearish and short the market as a whole. The good GDP data could be squeezing them out of those positions and causing a short, sharp rally.”

“If this is the case,” he continued, “then you will see the market fall over again soon. If we see the ASX 200 close under the Point of Control of 4,400 in the next week or so then I would be confident that this current buying was a short squeeze and I would expect to see much lower prices in the near future. But until that occurs, this surprise rally should be respected.”

Murray’s article, by the way, was called, “Beware the false break out.” That term, “the false break out,” along with “the point of control” is key to his method of trading the markets. You can find out more by reading about Slipstream Trader.

Now we have to do something that’s required from time to time if you’re not familiar with our business model. We don’t like talking about our business model because you’d probably rather be reading about the stock market or the economy. So we’ll be quick about it!

The Daily Reckoning is free. So is the other e-letter which we publish, Money Morning. In them, you read independent and provocative ideas about the share market and the world that we hope are useful and maybe even profitable. A whole back office team supports getting these e-mails out to about 100,000 people combined each day.

The Daily Reckoning and Money Morning also contain the views of our independent analysts, Kris Sayce, Alex Cowie, Murray Dawes, and Greg Canavan. All of these analysts have chosen to work with us because, like you I suspect, they value a perspective that’s not compromised by any other agendas. They’re free to research and write about whatever they think will make you money, or keep you from losing it.

The newsletters which all of those analysts write cost money. The subscription fee supports the whole operation, including keeping the free e-letters free. To sell subscriptions, we include advertisements. Without the advertisements – which usually feature our latest and best ideas – we find it’s hard to sell subscriptions.

Of course not everybody likes advertising. Not everybody likes vegemite either. But nearly everyone likes free. Of course nothing is ever free. So the price of you receiving a free e-letter that you may occasionally find value from is that you’ll see advertisements for products to which you may already subscribe or to which you have no intention of ever subscribing.

We hope it’s not asking too much that even if you don’t like the ads and don’t want to subscribe, you recognise that we’re in a business and this is how we can provide the e-letters for free. And if you recently received a note from Alex talking about a resource stock that Kris was recommending and wondered why Alex didn’t’ recommend it, the simplest answer is that Alex is not Kris.

That is, Alex writes about resource stocks exclusively and does he research in his own way. It starts with a lot of spreadsheets and lately has included a lot mine site visits and phone conversations with geologists. Alex is well-versed in the resource sector and its nuances.

Kris is a small-cap specialist. There are a lot of small-cap stocks in Australia. There are also a lot of resource stocks in Australia. Many of the small-cap stocks are also resource stocks. Thus, Kris will, from time to time, recommend a small-cap stock that is also a resource stock.

We’ve found that some readers prefer Kris. Some prefer Alex. And some value what both are doing and realise that both are doing their own thing in their own way. If that troubles you…well…it shouldn’t. And if it realllly troubles you, we invite you to take up our offer and request a refund.

Finally, we see that the Greens and Labor have made a deal and that U.S. police have shot an armed man at the headquarters of the Discovery Channel in Maryland after he took people inside the building hostage. And we see that in some strange way, the events are not unrelated. Not causally, mind you, but philosophically.

Part of the big agreement yesterday announced by Labor and Green honchos was the set-up of a multi-party parliamentary committee to put a price on carbon. You can read about it here. But when you read about it, it’s clear that it’s a pretty undemocratic way of pretending to have a debate without having a debate. Typical, but pretty cynical. And as ever with the political class, it defers to the exalted power of “experts.”

Green’s Senator Christine Milne says that this very European process will, “Set up a parliamentary committee representing all the interests in the parliament committed to a certain idea and then enabling the appointment of experts to that committee. So the experts are not just to give evidence to the committee. The experts are part of the deliberations of that committee and that way you create the space in a parliament for people to talk through their own perspectives, nuance those perspectives and try to come up with a parliamentary consensus which has the support of everyone around the idea. “

Emphasis added is our own. But really, how much nuance can you have when everyone on the committee can only be on the committee if they are already committed to a certain idea? How hard is it to build consensus when you exclude everyone who might disagree from participating?

Milne continued: “You will note in the agreement the proviso for membership of the committee is that the people going onto it are committed to a carbon price. They may not all agree with the mechanism of achieving a carbon price but they all want to a carbon price and the idea is to invite everyone to it and the Coalition clearly if they were in opposition would be invited to join it on that proviso. So, it really is about grown up politics in Australia. It’s about ending the all or nothing, it’s about ending the accusations of back flips and sell outs and back downs and so on.”

In order to end the all or nothing false choice, it was necessary to create an all or nothing committee. Everyone who’s on it has to be all for a carbon price. No one who’s against a carbon price can be on it. That really is an effective way to end the argument. By not having it all and excluding other points of view.

Of course the justification for this is that the people against a carbon price are really whack jobs who don’t believe in global warming OR climate change. What’s more, they aren’t even experts. They’re just people, people who believe that common sense is more valuable than credentials. They’re just people. Very little people.

Milne says, “It’s a process we adopted in Tasmania to a very small degree when we achieved gay law reform by bringing in experts from the university, the justice department and so on to work with the parliamentarians. This I think can resolve this issue of a carbon price. It’s very important to us. We want one as soon as possible and we think this mechanism is the best way of delivering it.”

In other words, the best mechanism of delivering an outcome that the public hasn’t clearly endorsed is to use a non-democratic process that only includes people committed to the desired outcome. And that’s democratic how?

Honestly, we have to give credit where credit was due on this one. Julia Gillard had it right. Get a phone book from each city of 10,000 people or more in Australia. Pick ten people at random from each phone book. Put them on a Climate Change Committee. Put them in a three-star hotel outside the airport in Adelaide and give them six days to debate the issue and, if they decide, come up with a law.

What could be more democratic than that? If a random jury of your peers is good enough to deliver equal justice under law in the criminal justice system – where judges and juries must deal with complex evidence and experts – why is it not good enough to for public policy too?

In fact, the more we think about it, legislative conscription may be the best way to run the country after all. Each term, a new randomly selected group of conscripts is drafted to serve in Canberra. They are paid the minimum wage. You can be sure Parliament wouldn’t sit for long and that the government would generally stay out of most people’s lives and wallets, affording Australians the time and money to be good parents and neighbours.

Let’s have a vote! All in favour? All opposed?

But wait, what does this have to do with eco-terrorist James Lee’s bizarre actions and manifesto earlier today? Well, in point one of Lee’s manifesto, he seems to endorse Senator Milne’s committee of experts idea. We’ve reproduced the whole point here so we’re not selectively quoting, although the emphasis added is ours and not Lee’s:

The Discovery Channel and its affiliate channels MUST have daily television programs at prime time slots based on Daniel Quinn’s “My Ishmael” pages 207-212 where solutions to save the planet would be done in the same way as the Industrial Revolution was done, by people building on each other’s inventive ideas. Focus must be given on how people can live WITHOUT giving birth to more filthy human children since those new additions continue pollution and are pollution. A game show format contest would be in order. Perhaps also forums of leading scientists who understand and agree with the Malthus-Darwin science and the problem of human overpopulation. Do both. Do all until something WORKS and the natural world starts improving and human civilisation building STOPS and is reversed! MAKE IT INTERESTING SO PEOPLE WATCH AND APPLY SOLUTIONS!!!!

If poor Mr. Lee had just decided to run for office in Australia, he could be earning a public wage now instead of cooling in a morgue somewhere. He certainly has the right instincts to be in politics. He believes in coercion. He believes in State control of the media. He thinks “top down” solutions imposed from above should trump individual choices. He believes in expert scientists of a certain point of view. He’s against human civilisation and believes that children are filthy pollution.

Point four of his manifesto gets to the heart of his pro-planet, anti-human life message. He writes that, “Civilisation must be exposed for the filth it is. That, and all its disgusting religious-cultural roots and greed. Broadcast this message until the population of the planet is reversed and the human population goes down! This is your obligation. If you think it isn’t, then get the hell off the planet! Breathe Oil! It is the moral obligation of everyone living otherwise what good are they??”

Gee. That’s pretty much straight out of the tyrant’s modern political play book, isn’t it? Civilisation is filth? Check! Religion and culture and tradition are disgusting? Check! Human population should go down because it’s a pestilence? Check! Your obliged to agree? Check! If you disagree, go to hell? Check! If you disagree, you’re immoral? Check!

You get the feeling that some people just don’t like humanity. You get the feeling that some people view human life as a problem to be solved. That solution is vague, but usually involves somebody else dying without being killed. You get the feeling that deep down, some people view human beings as parasites on the planet. You get the feeling some people don’t feel very good about themselves but would like to take it out on the rest of us.

We also get the feeling that some people don’t view human life as the Ultimate Resource, as economist Julian Simon put it. Our view is that these people are themselves very selfish. They can’t imagine the world they live in coping with all the problems they perceive. So they want to destroy the world as it is and remake it into the world they want to live in, even if that world doesn’t include you and me.

It’s all very self-centred, moralistic, and unimaginative. And of course, Lee was plain crazy. He wrote, as this paragraph proves:

The world needs TV shows that DEVELOP solutions to the problems that humans are causing, not stupefy the people into destroying the world. Not encouraging them to breed more environmentally harmful humans. Saving the environment and the remaining species diversity of the planet is now your mindset. Nothing is more important than saving them. The Lions, Tigers, Giraffes, Elephants, Froggies, Turtles, Apes, Raccoons, Beetles, Ants, Sharks, Bears, and, of course, the Squirrels.

Of course the Squirrels!

TV will save us!

Save the froggies.

It would all be absurd and sad if there weren’t real live crazy people trying to run the government who didn’t’ share more or less the same anti-human, anti-civilisation worldview.

Dan Denning
for The Daily Reckoning Australia

Similar Posts:

• If Market Keeps this Way, There May Be More Beaten Down Stocks
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More articles from The Daily Reckoning….

Zero Hedge

You will pardon us for posting two excerpts from David Rosenberg today, but this one is a must read, and explains more clearly than anything written on the matter why America is currently, and without doubt, in a depression, due primarily to ongoing secular changes in consumer and investor behaviour, something not experienced during mere recessions. As such any intraday or short-term bounces in the stock market that merely confirm that there was a liquidity injection by one player or another, or a successful short squeeze engineered by the wily folks at the custodian firms or due to simple headfakes, are completely irrelevant (especially with record implied correlations), as the long-term trend has only one way to go in the long-run. Down. Of course, those who believe they can time the moment when the last lingering support pillar collapses and everything tumbles down, are more than welcome to keep trying their top-ticking. We are confident that when the mass exodus begins, the HFT liquidity “support” of the market will be alive and well, and provide everyone with a perfectly acceptable exit price level…

WHAT IS A DEPRESSION ANYWAY?

A depression, put simply, is a very long period of economic malaise. A series of rolling recessions and modest recoveries over a multi-year period of general economic stagnation as the excesses from the prior asset and credit bubble are completely wrung out of the system. In baseball parlance, we are in the third inning of this current debt deleveraging ball game.                                     

You know you’re in a depression when interest rates go to zero and there is no revival in credit-sensitive spending. 

The economy is in a depression when the banks are sitting on $1.3 trillion of cash and yet there is no lending going on to the private sector. It’s otherwise known as a liquidity trap.    

Depressions usually are caused by a bursting of an asset bubble and a contraction in credit, whereas plain-vanilla recessions are typically caused by inflation and excessive manufacturing inventories. You tell me which fits the bill today.

When almost half of the ranks of the unemployed have been looking for a job fruitlessly for at least six months, you know you are in something much deeper than a garden-variety recession. True, we can’t see the soup lines; the soup lines are in the mail — 99 weeks of unemployment cheques for over 10 million jobless Americans. Don’t be lulled into the view that we are into anything remotely close to a normal economic cycle.

Basically, in a depression, secular changes take place. Attitudes towards debt, discretionary spending and homeownership are altered for many years, or at least until the scars from the traumatic experience with defaults and delinquencies fade away. That is why, as per last week’s data releases, we saw existing home sales slide to 15-year lows and new home sales to record lows despite the fact that mortgage rates have tumbled to their lowest levels in modern history. There is no economic model that would tell you that declining  mortgage rates should lead to lower home sales.

In a depression, radical changes occur in terms of social norms and spending behaviour. In recessions, people don’t cancel their life insurance policies – as one example. But in a depression, tragically, that is what happens – almost 35 million Americans now have no such coverage, up from 24 million five years ago. This reflects the focus by households to pay down their debts at all costs and how companies have bolstered profits – by eliminating benefits.

More fundamentally, in a recession, the economy is revived by government stimulus. In depressions, the economy is sustained by government stimulus. There is a very big difference between those two states.    

After all, we are now in a situation where every 1-in-6 Americans is now receiving some form of government assistance — more than 50 million Americans, from food stamps, to Medicaid, to extended jobless benefits, are on one or more taxpayer-supported programs. That transcends the definition of a recession.

In a recession, everything would be back to a new high 33 months after the initial decline. This time around, everything from organic personal income to employment to real GDP to home prices to corporate earnings to outstanding bank credit are still all below, to varying degrees, the levels prevailing in December 2007.

Let’s be clear: After all the monetary, fiscal and bailout stimulus, the economy should be roaring ahead, as would be the case if the economy were coming out of a normal garden-variety recession. The fact that there has been no sustained response to all these efforts by the government to turn things around is a testament to the view that this is not actually a traditional recession at all, but something closely resembling a depression. That, my friends, is exactly what the bond market is signaling, with Treasury yields rapidly approaching Japanese levels.  

For all the chatter about whether the recession that started in December 2007 ended sometime last year, here is what you should know about the historical record. The 1930s depression was not marked by declining quarterly GDP data every single quarter. In fact, the technical recessionary aspect to the initial period following the asset and credit shock goes from the third quarter of 1929 to the first quarter of 1933.

What is important to know is this; in that initial four-year economic downturn, from 1929 to 1933, there were no fewer than six — six! – quarterly bounces in GDP data. The average gain in these up-quarters was 8% at an annual rate! But because they proved not to be sustainable, the National Bureau of Economic Research (NBER) refused to declare that the recession officially ended, even though the stock market rallied 50% in the opening months of 1930 on the belief that the downturn was about to end. False premise. And guess what? We may well be reliving history here. If you’re keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%.

I can understand how emotional the debate can get over whether or not we have actually just stumbled along some post-recession recovery path or whether or not this is actually a depression in the sense of a downward trend in economic activity merely punctuated with noise that is influenced by recurring rounds of government intervention. The reality is that the Fed cut the funds rate to zero, as was the case in Japan, to little avail. Then the Fed tripled the size of its balance sheet – again with little sustained impetus to a broken financial system. Government deficits of nearly 10% relative to GDP, or double what FDR ever ran during the 1930s, have obviously fallen flat in terms of providing and lasting impact to the economy.  

This is going to sound like a broken record but it took a decade of parabolic credit growth to get the U.S. economy into this deleveraging mess and there is clearly no painless “quick fix” towards bringing household debt into historical realignment with the level of assets and income to support the prevailing level of liabilities. We are talking about $6 trillion of excess debt that has to be extinguished either by paying it down or by walking away from it (or having it socialized). Look, we can  understand the need to be optimistic, but it is essential that we recognize the type of market and economic backdrop we are in.

The markets are telling us something valuable when (after a period of unprecedented government bailouts, incursions and stimulus programs) we had a 2-year note auction that saw the yield dragged to new record low of 0.46%. Instead of lamenting over how attractively priced equities must be in this environment, market strategists and commentators would bring a lot more to the table if they tried to decipher what the macro message is from this price action in the Treasury market. Conducting stock market valuation analysis based on unrealistic consensus earnings assumptions does nobody any good, especially when these estimates are in the process of being  cut.

If the Treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $60 or $65 in the coming year as opposed to the current consensus view of almost $90. In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 12x was actually buying the market with a 17x multiple.

How’s that for a reality check?

More articles from Zero Hedge….

One of the oldest methods of protecting your retirement money is by spreading risk out among different stocks and sectors. While this may be a partially effective way of mitigating the risk of a major drawdown in your account, it does NOT ensure success. In fact, in a broad market sell-off, you may see several sectors moving lower at the same time, similar to what we’ve experienced over the past couple months.

Read more….

By Charles Hugh Smith, OFTWOMINDS
A generation too poor to retire but healthy enough to keep working into their 70s is a new and not necessarily positive phenomenon.

Go to my main site at www.oftwominds.com/blog.html
for the full posts and archives.

More articles from Charles Hugh Smith….

Zero Hedge

Miss out on ProPublica’s must read piece on self dealing in CDOs (which is currently translating to comparable practices in stocks, and virtually all risky assets, now that retail investors want out)? Here is your chance to catch up, courtesy of a few simple to understand cartoons. While not news to anyone who lived through the crazy days of 2006-2007, this simple visual should be archived and recreated in when alien historians try to explain why the world ended and the Dow was at 36,000,000 and going up, as it explains precisely what is happening in the stock market today.

More articles from Zero Hedge….

Zero Hedge

So you thought communist states go down without a fight? Wrong: here is Rosenberg who explains why both China and the US are now actively involved in the business of propping up anything and everything. And totally off topic, Rosie confirms that the liquidity trends in the mutual fund industry continue to deteriorate: “As for liquidity ratios, equity funds portfolio manages have theirs at an all-time low of 3.4%, down from 3.8% in June. Tack on the fact that there are really not very many shorts to be covered – since the market peaked in April, short interest is 4.3% of the S&P 500 market cap (in August 2008 it was 6%) and there’s not a whole lot of underlying fund-flow support for the stock market here.” In other words, throw in a few more market down days, a few more weeks of redemptions (and at 16 weeks in a row, there is no reason why this should change), and the liquidation theme will promptly be added to the new normal.

THE VISIBLE HAND

The two largest economies in the world are being sustained by the long arm of the law. At least in China it’s to be expected that a communist country would be fuelled by command central, but in this miracle story, below the surface it is becoming abundantly clear that Beijing is becoming increasingly involved. The front page article of the Monday NYT uncovered how the economy is delivering its red-hot growth rates: “New data from the World Bank show that the proportion of industrial production by companies controlled by the Chinese state edged up last year … investment by state-controlled companies skyrocketed, driven by hundreds of billions of government spending and state bank lending.” No wonder the Chinese economy and stock market have diverged.

Is it really much different in the U.S.A. today with every 1 in 6 Americans now receiving some form of government assistance? More than 50 million Americans, from food stamps, to Medicaid, to extended jobless benefits, are on one or more taxpayer-supported programs. This likely explains why this depression does not have that 1930s feel of despair to it. But a depression it is.

In a depression, radical changes occur in terms of social norms and spending behaviour. In recessions, people don’t cancel their life insurance policies — as one example. But in a depression, tragically, this is what happens — almost 35 million Americans now have no such coverage, up from 24 million five years a go. This reflects the focus by households to pay down their debts at all costs and how companies have bolstered profits — by eliminating benefits. See More Go Without Life Insurance on page C1 of the Monday WSJ.

It’s not just households and businesses that alter their behaviour in a depression. That goes for any entity with balance sheet constraints — like cash-strapped state and local governments who are closing hospitals en masse to cut costs (see Cash Poor Governments Ditching Public Hospitals on page C3 of Monday’s WSJ) and at the same time, boosting taxes (on the same page, see States See Pickup in Tax Revenue).

More articles from Zero Hedge….

Imagine a help wanted ad in your local paper that reads: Job openings, overweight senior citizens only, preferred ages 60 to 75.

Hard to believe it, right? Well, believe it.

These are essentially the worker characteristics demanded by the employer in question –Santaforhire.com of Newport Beach, Ca., the nation’s largest provider of live St. Nicks for assorted functions around the country.

“We want people who are fat, old, bearded and have that grandfatherly look,” says Bob Mindte, owner of the Santa supplier. There are also openings for a Mrs. Claus, who, like hubby, is expected to possess an expansive girth.

I last caught up with Mindte in early September of 2008. At the time, he lamented that his business that year would probably be down about 10% because of a deepening recession, a rising unemployment rate (just above 6% at the time), skidding home prices and a slumping stock market.

He was wrong. A late flurry of demand for Santas that year enabled his firm to just about equal 1997 figures. In fact, he has enjoyed solid Santa demand throughout the recession and the same applies this year.

“I think we’ve become one of those recession-proof businesses,” says Mindte, whose firm, now in its 11th year of operation, has hired between 1,500 and 2,000 Santas over the years. Customers include such leading retailers as Saks and Nordstrom and the most recent Bush White House.

“We haven’t heard from President Obama yet,” says Mindte, “but it may be he doesn’t want to do anything that his predecessor did.”

At present, there are about 15 million job hunters out there or 24.3 million if you factor in people who’ve left the work force and part-timers who can’t get full-time jobs. You, in fact, may be one of them. If so and you’re looking to make some extra bucks, you just might want to consider a Santa stint. Or perhaps a Mrs. Claus stint.

Don’t laugh. Depending on the time and location, a Santa can earn as much as $300 an hour or $6,000 to $8,000 for a six to eight-week holiday season (November and December). An accompanying Mrs. Claus is paid about half as much as Santa.

Here’s a more specific look at dollars and cents Santa economics. If you’re willing to play St. Nick at a mall, the pay is $1,000 a week. Willing to play Santa at a Christmas or New Year’s eve party? That will net you $300 an hour. Or donning a Santa suit at an office party runs $150 an hour. Ditto appearing as Santa in a TV ad. A private visit to someone’s house in Santa garb will earn you $100 an hour, as will a photo shoot at a photo studio. For outdoor charity collections, the going rate is $50 an hour.

If you’re interested, the time to apply is now because Christmas is less than four months away and the hiring period will soon be over. Incidentally, there are no fees for would-be Santas; they’re all paid by the hiring companies. To get all the particulars, e-mail Mindte at Info@Santaforhire.com.

So the next time you hear someone singing “Santa Claus is coming to town,” they may well be singing about you.

What do you think? E-mail me at Dandordan@aol.com

Read more….

By Michael Trinkle, ForexTraders

Yesterday’s Asian session saw a lot of activity and was generally dominated by sales, but the American market seems to have found some floor on somewhat positive confidence and home sales data. The market seems to be rowing against the currents, however, because the positive nature of the releases is only on the surface.

Among today’s news, neither the report about better than expected industrial production rates (0.3% vs. -0.4%)in Japan in August, nor data on growth of retail sales have done much to help Japanese stocks. Nikkei was down by more than 3 percent, and most Asian stock markets registered losses, even as currencies remain strong against the USD. In U.S. better than expected home sales data for June failed to make any impact since we already possess disastrous numbers for July.

Moody’s warns about Chinese banks

Apart from uncertainty caused by Japanese inaction,pessimism about Asia was boosted today on a report by Moody’s, via the Telegraph, about the unsustainability of the current lending practices in mainland China, where the government is risking future stability by supporting bank lending through debt (i.e. higher leverage).

“Moody’s said China Investment Corporation (CIC), the country’s sovereign wealth fund, borrowed $8bn last week to recapitalise three state-owned banks, using debt rather than genuine equity to boost bank capital.

The agency said that beefing up the banks by this method is “credit negative” for China as a whole: “The increases in assets and equity are artificial and without real economic substance. The increase in reported equity enables the banks to lend more and effectively leverages up the system.”

• Weird rumors about Zhou Xiao Quan defecting leads to early Asian sell-off

  Testimony to the degree of nervousness that exists in the markets about China right now, Asian session saw major a sell-off upon claims that the PBOC Head, Zhou XiaoQuan, who had not been visible for a while in the media, had defected fearing punishment for large losses of about $430 billion suffered in consequence of his team’s FX management strategies.

  China may be a strange place in many ways, but it is not North Korea. One has to look a long way back to the past, to the times of the Zhao Ziyang, for example, to find the kind of ostracism that might conceivably compel an official to leave the country. The fact that rumors like this can find credibility is nothing more than a sign of how skeptical many people have become about the multiple Chinese bubbles, but even with all the problems in the country, the head of the central bank defecting because he fears punishment is just too outlandish to be believed.

Israel says Iran may attack a Middle-East nation, Iran threatens to bomb Dimona

The problems between Iran and Israel are not new, but the intensity of rhetoric has been increasing for the past three months or so. In yet another step of escalation, an Iranian official is quoted as saying that the country will bomb Dimona Nuclear Reactor if it gets attacked, as Israeli minister Dan Meridor, in a question and answer session on Israeli radio in Farisi, expressed his fear that Iran would attack a Middle Eastern nation.

What he means is probably that the Iranians will respond to American bombing of their reactors by attacking Israel, which is, in his thinking, a third party not involved in hostilities. We suspect that this type of comment reflects the desire of Israelis to leave the military attack to the US due to their frontline status, and the greater risks they would face in the face of an Iranian counterattack. That also speaks against a unilateral, pre-emptive Israeli attack on Iranian installations.

It is of course difficult to reach conclusions on the basis of isolated statements such as these, but given the importance of the Gulf Area in maintaining global economic stability, traders must keep an eye on the region even if matters appear to progress (almost) smoothly at the moment.

CFTC withdraws reform proposals, leaving retail forex clients free to (almost) suicide at 100:1 leverage

The CFTC had made some sensible and suitable proposals for reforming the FX market a while ago, but those proposals appear to have been withdrawn in the face intense opposition from lawyers, dealers, and some speculators. The most crucial piece of contention is maximum leverage, naturally, since it is a major cause of the frequently large losses suffered by traders, and the huge profits reaped by brokers.

The CFTC had proposed a regulation capping leverage at 10:1, at just one tenth of the currently available level at 100:1 in the U.S. At the moment, in the EU and the UK even higher leverage is possible, which explains why so many brokers prefer to base their operations in European or British centers. The calculation is simple,:while returns for the trader are often disappointing, the broker makes ten times as much money from the spread at 100:1 leverage than he would at 10:1.

Among other things, according to the statement at the CFTC website, the new, diluted rules will require “the registration of counterparties offering retail foreign currency contracts as either futures commission merchants (FCMs) or retail foreign exchange dealers (RFEDs), a new category of registrant. Persons who solicit orders, exercise discretionary trading authority or operate pools with respect to retail forex also will be required to register, either as introducing brokers, commodity trading advisors, commodity pool operators (as appropriate) or as associated persons of such entities. “Otherwise regulated” entities, such as United States financial institutions and SEC-registered brokers or dealers, remain able to serve as counterparties in such transactions under the oversight of their primary regulators.“

In other words, the CFTC is aiming to streamline regulation, and end the chaotic state of the retail forex market by establishing straightforward regulatory categories.

Also,

“FCMs and RFEDs are required to maintain net capital of $20 million plus 5 percent of the amount, if any, by which liabilities to retail forex customers exceed $10 million. Leverage in retail forex customer accounts will be subject to a security deposit requirement to be set by the National Futures Association within limits provided by the Commission. All retail forex counterparties and intermediaries will be required to distribute forex-specific risk disclosure statements to customers and comply with comprehensive recordkeeping and reporting requirements. “

On the whole, pretty much of a disappointment, after we have seen how miserable the consequences of letting an industry regulate itself are in the subprime crisis. The CFTC is letting the NFA determine leverage limits, which means that the brokerage business will get away with whatever limit (or lack of it) serves its interests best.

In sum, we note gold’s powerful rally today, and, in agreement with others, anticipate the breaking of new records in the coming weeks. In other respects, we continue to expect a significant deterioration in global economic stability largely as a consequence of major upheaval in China and the rest of the Asian region. We believe that this phase of the economic downturn lasting since 2007 will reach its climax in Asia, and Europe in the next two years.

More articles from ForexTraders….

The Daily Reckoning

Bad day for stocks, yesterday. A bad day. Not a terrible day. Not a crash day. Just a bad day.

The Dow fell 140 points. This was baaaad…because it shows that the stock market does not really buy Bernanke’s storyline.

You’ll recall that when we left off last week, Ben Bernanke assured the world that while the recovery was not exactly what he had hoped for, he nevertheless had the situation in hand. He said he had the tools necessary to fix the problem and would do whatever was required.

The initial reaction was positive. The Dow rose more than 160 points on Friday. Some analysts thought the market’s downward trend had been broken. But it needed follow-through on Monday. Instead, the market fell.

The fact is, there is no recovery…and no recovery is possible…and investors are beginning to realize it.

Then what is going on? A “Great Recession,” say some analysts. A “depression,” say others.

There is a good article in The Financial Times that helps understand what is really going on. It’s by Ken Rogoff and Carmen Reinhart; you’ve heard of them before, dear reader. They are the ones who researched dozens of episodes of financial crisis and sovereign default throughout history.

Today, they write in the FT about what happens after a financial crisis. Well, what do you think? Do you think you get a “recovery”? Do things go back to normal? Is the recession over quickly and painlessly?

Not at all. Instead, there is rarely anything you would recognize as a “recovery.” Things do not go back to normal because they weren’t normal before the crisis. Crises are caused by abnormal conditions – usually too much credit, too much debt, too much spending and too much speculating. Then, when the bubble blows up, it typically takes a long time for the economy to get back on its feet.

Over the following ten years, unemployment usually stays higher than it was before the crisis.

Growth rates are usually lower.

And ten years after a blow-up in real estate house prices are still usually BELOW where they were when the crisis hit.

But what if the feds really get on the ball and try to turn things around? Then, watch out!

We read an article on dying yesterday. Here’s a question for you, dear reader. Would you rather live in a recessionary economy or die in a booming one? We’ll take the recession. Probably most people would. Heck, make it a depression.

There are a lot of illnesses for which there are no cures. Still, people will spend a fortune…and endure unspeakable treatments…in the hopes that they will be the one in a thousand who survives.

So too are people ready to believe that Dr. Bernanke can cure what ails the US economy. We don’t think so. Because we don’t think the economy is “sick.” We think it is healthy…and finally correcting the mistakes of the Bubble Epoque.

Leading economists and the feds have believed, for example, that there was some problem of “liquidity” that was temporarily blocking the flow of cash and credit. They believed the problem could be solved by making more money available. That was why the Fed bought an extra $1.4 trillion of the banking sector’s suspicious “assets.” They wanted to make sure the banks had money to lend.

Well, now the banks have plenty of cash. Businesses too have record holdings of cash. Even households are rebuilding their cash accounts.

But who’s borrowing? Who’s spending? Who’s buying new houses, for example? (New house sales are currently taking place at the slowest rate ever measured.)

CNN: “Credit if finally available, but no one wants it.”

And more thoughts…

Why don’t people borrow?

Because it’s not a liquidity problem. It’s a debt problem. A solvency problem. And it won’t go away by making more cash and credit available. Instead, all those bad decisions, bad loans, and bad investments have to be cleaned up. And that takes time. And while the economy is de- leveraging, people are becoming more cautious…more risk-averse…more modest in their expectations.

What do Rogoff and Reinhart say about governments’ efforts to fix these problems? What does history show?

They say the feds often make the situation worse.

Not only do governments typically pour bad money after good, they also disrupt the process of correction. Insolvent banks are kept alive. Big businesses that ought to go broke and be sold off are instead propped up…the lights are kept on by government subsidies, preventing new competitors from occupying the space. Consumers and investors keep waiting for the promised “recovery”…for the cure…for the fix. Instead of quickly adjusting to the new circumstances, they delay…they hesitate…they postpone unpleasant changes.

They might quickly sell a house at a loss, for example. They could then go on with their lives. But when they hear the feds tell them they have a new program in the works…or a new stimulus bill in Congress…or new action by the Fed…what are they supposed to think?

“Maybe I should wait and see if this new effort does the trick…” they say to themselves. “I’ll feel like a real fool if I sell now and then the feds get a new bull market going.” “Maybe I should wait before accepting a job at a lower salary; it says in the paper that the economy should recover by summer…”

The economic setbacks of the 19th century were sharp, but fairly short, affairs. The contribution of modern economics has been to stretch them out and make them worse.

*** How about China? Won’t growth in China and the other BRICs lead the whole world out of its funk?

We wouldn’t count on it.

First, the Chinese economy has been growing at near double-digit rates for the last ten years. It didn’t stop the crisis and so far it hasn’t helped the developed nations – at least the US – get out of it.

More important, China is probably getting itself into a big mess too. All we know is what we read in the paper on the subject. But what we read is that the spectacular growth China has enjoyed so far was made possible by freeing the private sector. But now the Chinese government is muscling the entrepreneurs out of the way.

“Now…it is state-run Chinese companies that are on the march,” says The New York Times.

Railroads, mining, airlines, manufacturing, hotels, yogurt… The Chinese government either owns it, controls it, or invests in it.

And if you think private investors make mistakes, you should see what the government does!

A Daily Reckoning dictum: people make mistakes all the time; but if you want to make a real mess of things, you need taxpayer support.

Regards,

Bill Bonner
for The Daily Reckoning Australia

Similar Posts:

• We Expect No Recovery from the Economy
• Feds See Every Emergency as an Opportunity
• Investors Are Betting On Recovery
• Is Inflation Necessary for Recovery and Growth in the United States?
• The Return of the Cattle Market

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