Philip Davis'  Instablog

Courtesy of Robert Reich

The US economy added 162,000 jobs in March. Great news until you look more closely. In March, the federal government began hiring census takers big time. These are six-month temp jobs, and they tell us nothing about underlying trends in the labor market. It’s hard to gauge precisely how many were hired — probably between 100,000 and 140,000, although some estimates put the hiring as low as 48,000. Almost a million census workers will need to be hired over the next few months. Subtract these, and today’s job numbers are good but nothing to write home about...

See also “Fraud on the Street.” 

Prescient essay by Robert Reich.  Try to guess when this article was written. – Ilene

Paper entrepreneurs — trained in law, finance, accountancy — manipulate complex systems of rules and numbers. They innovate by using the systems in novel ways: establishing joint ventures, consortiums, holding companies, mutual funds; finding companies to acquire, “white knights” to be acquired by, commodity futures to invest in, tax shelters to hide in; engaging in proxy fights, tender offers, antitrust suits, stock splits, spinoffs, divestitures; buying and selling notes, bonds, convertible debentures, sinking-fund debentures; obtaining government subsidies, loan guarantees, tax breaks, contracts, licenses, quotas, price supports, bailouts; going private, going public, going bankrupt...

Courtesy of New Deal 2.0, by  Joe Costello

FT has some good pieces on how we’re now innovating the iron ore markets. It was one of the last commodity hold-outs that now falls into the hands of the traders. After all, you may never know when this year’s crop of ore might go bad in the field or something right? Hard to keep steady prices without someone taking a bath with such a perishable commodity, which is why it needs to be trading 24 hours a day. FT writes:

That process reached its conclusion on Tuesday when miners and steelmakers ditched the system of annual contracts and long negotiations that had been in place since the 1960s for new short-term deals based on the spot market....

Courtesy of Jr. Deputy Accountant

It’s sort of funny if you stop to think about it: here the US is saying we need to gut and replace a metric sh*t ton of McMansions stuffed with Chinese drywall and on the other hand have China bitching about the “unsafeness” of US Treasurys...

Courtesy of John Mauldin at Thoughts from the Frontline

Last week I wrote a letter to my kids trying to explain what Greece meant to them.

Reader Ken V wrote: “Great letter, John. Now you should write one for the adults who are retired and don’t have the long future your kids do. If the US becomes Greece, things won’t recover in time for much of the rest of my life to be more than one grim, dreary period. What is your investment advice for those with roughly a 10-year horizon, not 30-40-50 years?”...

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Courtesy of JOHN RUBINO at Dollar Collapse

With the gold price suppression scheme apparently breaking open — see this article and this interview — the question becomes when, not if, holders of futures contracts will start demanding physical delivery. Most will discover that the metal isn’t there, which will, ahem, unsettle the commodity and currency markets...

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Courtesy of Mish

Having lost two court cases in lawsuits filed by Bloomberg, Fed Reveals Bear Stearns Assets It Swallowed in Firm’s Rescue.

In a 4:30 p.m. announcement in a week of congressional recess and religious holidays, the central bank released details of securities bought to aid Bear Stearns’s takeover by JPMorgan Chase & Co. Bloomberg News sued the Fed for that information.

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Obama’s Economic Brain Trust

By PAM MARTENS writing at CounterPunch 

America is held out to the world as a meritocracy. You work hard, you play by the rules, you make sound judgment calls, you succeed. That’s the American dream. Right?  That’s what the President of the United States should exemplify in his actions. Right?      

Then how does one explain the individuals who represent the abject failures of financial and regulatory theory chosen by the President to dominate the dialogue on financial reform.  How does one reconcile President Obama appointing Lawrence Summers as head of the National Economic Council after Mr. Summers played a central role in rolling back the safeguards that led to the current financial crisis.

This is what Mr. Summers had to say at the November 12, 1999 signing ceremony for the Gramm-Leach-Bliley Act, the draconian legislation that repealed the Glass-Steagall Act and allowed commercial banks holding insured deposits to merge with investment banks, brokerage firms and insurance companies: the very same combinations that led to the 1929 stock market crash and ensuing Great Depression...     

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Courtesy of Mike Whitney writing at the Market Oracle

Whew. That was fast. It didn’t take long for Wall Street to figure out how to game Obama’s new mortgage modification program, did it? The plan was hyped as help for "struggling homeowners", but it turns out, it’s just another stealth bailout for pudgy bank-execs. It’s funny, the program hasn’t even kicked in yet and, already, bigtime speculators are riffling through their filing cabinets looking any garbage paper they can find to dump on Uncle Sam. Take a look at this on today’s Bloomberg report...

Photo courtesy of Jr. Deputy Accountant

Courtesy of The Pragmatic Capitalist 

A smattering of analyst opinions on the job’s report appears pretty mixed.  I think the main takeaway here is that this is not a huge market moving event.  The improvement is meager and there is A LOT of work yet to be done before we can claim a recovery... click here for more. 

Stephen Schork’s short oil, but acknowledges that it could go higher. For more, watch the video. – Ilene 

Courtesy of The Pragmatic Capitalist 

Stephen Schork, president of the Schork Group, talks with Bloomberg’s Julie Hyman about the oil market and outlook for prices.  Click here. 

Courtesy of Mish

This morning the BLS reported an increase of 136,000 jobs. Headline unemployment was unchanged at 9.7%. Before diving into the numbers let’s look at a couple questions from a live Q&A session. The BLS took questions in advance.

Seasonality Question Unanswered...

Courtesy of Jr. Deputy Accountant

(h/t JM – thanks for the tip!)

Who here ISN’T shocked that the NY Fed’s newly-released Maiden Lane details show Goldman Sachs underwrote the largest number of Maiden Lane III (AIG) CDOs? Show of hands? That’s what I thought....

Sorry Jamie, don’t look to Jr. Deputy Accountant for sympathy. – Ilene 

Courtesy of Jr. Deputy Accountant

 Pic credit: LOLFed

What a cry baby. In last year’s letter, Dimon whined that the company only made a paltry $6 billion in 2008 when they should have made more like $15 billion and would have were it not for that meddling financial crisis and what-have-you. Cry cry cry.

WaPo:

J.P. Morgan Chase cut consumer access to credit and canceled credit cards in response to legislation signed into law by President Obama last year, the bank’s chief executive Jamie Dimon said. The credit card reform act, which went into effect in February, could cost the bank up to $750 million in annual profits, he added....

Déjà vu, all over again.

By NewScientist

IT’S like remembering the future. Our brain generates predictions of likely visual inputs so it can focus on dealing with the unexpected.

Predictable sights trigger less brain activity than unfamiliar stimuli, bolstering the view that the brain is not merely reactive, but generates predictions based on the recent past. "The brain expects to see things and really just wants to confirm it now and again," says Lars Muckli at the University of Glasgow, UK.

[...]

The finding supports the "Bayesian brain" theory, which sees the brain as making predictions about the world which it updates when new information comes in.

Courtesy of The Reformed Broker, Joshua M Brown

LOL...

Courtesy of Andrew Horowitz of The Disciplined Investor 

John Mauldin was the recent guest on The Disciplined Investor Podcast. A great deal of insight in this episode….

Click HERE to listen….

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Courtesy of George Washington

Harold Bradley – who oversees almost $2 billion in assets as chief investment officer at the Kauffman Foundation - told the Reuters Global Exchanges and Trading Summit in New York that a cabal is preventing swap derivatives from being forced onto clearing exchanges:

There is no incentive from the moneyed interests in either Washington or New York to change it…

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Here’s Jesse’s thoughts on the essay by Robert Reich posted here a couple hours ago. Jesse’s introductions are always worth reading. Jr. Deputy Accountant (photo credit) addresses the credibility of Obama’s financial team. –Ilene 

Courtesy of JESSE’S CAFÉ AMÉRICAIN

One of the first things that ‘put me off’ of Obama was the choice he made of key appointments to his Administration, selecting the two Robert Rubin acolytes Tim Geithner and Larry Summers to his team, marginalizing Paul Volcker, and then making no place for Robert Reich...

From The Fed Is In Hot Water by Robert Reich

"First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself. Thomas Jefferson put a stop to Alexander Hamilton’s idea of a powerful central bank out of fear it would be unaccountable to the public. The Fed has just proven Jefferson’s point...

Don’t you think the Fed is the last quasi-private-government-who-knows-what agency that should be given greater authority to do anything? Geez. – Ilene 

Courtesy of Robert Reich 

The Fed has finally came clean. It now admits it bailed out Bear Stearns – taking on tens of billions of dollars of the bank’s bad loans – in order to smooth Bear Stearns’ takeover by JPMorgan Chase. The secret Fed bailout came months before Congress authorized the government to spend up to $700 billion of taxpayer dollars bailing out the banks, even months before Lehman Brothers collapsed. The Fed also took on billions of dollars worth of AIG securities, also before the official government-sanctioned bailout...

Picture by Elaine Supkis.

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By Mises.org

H/tip to Tom Burger ("It is entertaining and I can even understand the lyrics. A fascinating and rare example of economic theory meeting up with pop culture. Well … okay … it’s probably the ONLY example…")

The Mises Institute is pleased to welcome John Papola to the Austrian Scholars Conference, March 11-13, 2010, Auburn, Alabama. John is the co-producer along with Russell Roberts of “Fear the Boom and Bust,” the youtube smash hit that pits Hayek against Keynes in a rap song about the business cycle… more here.>

Video here.>  There is also "The Making of … " here.

Courtesy of Damien Hoffman at Wall St. Cheat Sheet
 

Bill Fleckenstein has kept a hawk’s eye on what the government does to our economy. Most recently, Bill wrote an excellent article describing the new health care law as “the great health care bailout.”

I caught up with Bill to discuss three hot topics:

1) How the new health care law will affect our economy;

2) Whether the Fed has painted itself into a corner of low interest rates; and,

3) Whether the foreign debt crisis are an omen for what’s coming to the US.

The Federal Reserve is Public Enemy #1 with Bill Fleckenstein