Peoplenomics Subscriber Update

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Peoplenomics Subscriber Advisory

As of 9:26 AM Central Time Sunday, the Peoplenomics.com site is down.  Technicians are working on the problem and will get it restored as soon as possible. - G 

Service restored at 9:34 AM CDT

Disinflation's Dance

I've become converted to the view that the best indicator of where the country is going economically is to look at consumer confidence and consumer debt figures.  Both came out this week to little fanfare because frankly, most people don't look much beyond the microwave or the high def in everyday life.  But, for both of us who do, the most important number from the not really) Federal Reserve this week is that consumer credit (which is really consumer DEBT) was up a weaker than expected $4.71 billion in October.   Repeat after me: recession.

The most worrisome part of the report is that non-revolving debt, for things like autos, mobile homes, education, boats, trailers, or vacations was down 1.3% annualized, after being down 1.1% annualized in September.  Put simply, the toy money is drying up.

Revolving credit was headed up at an 8.3% rate but we get no guidance in the Fed's G.19 report as to whether that's based on real purchases, or just the effects of bank card outfits pushing up rates when people get behind on their payments.

The Fed report also has other little goodies in it, if you care to look.  For example, they figure the average price of a new car in Q3 of 2007 was running $28,252.  The report then also reveals that the average price of new cars in Q3 a year earlier was 27,111.  4.2% inflation is getting close to double the 2.3% cost of living adjustment Social Security is pushing off on folks.  Maybe folks on SS aren't supposed to drive?

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Did I mention that digidollars are still being created at a 17% annual rate while paper currency/real money (M1) is being created as a 1-10th of one percent rate (NSA) per the latest YoY money stock numbers?  Oh, and that means currency is disappearing as remember the population of the US has gone up more than 1-10th of one percent in the past year, so less paper for each of us...

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Not surprisingly then there's consumer confidence, which has fallen to a two-year low.  This despite the happy talk about the economy and the latest...

BLS Data, Redux

Aha!  Another reader who gets it.  Remember Friday morning when I told you that I was rolling on the floor, laughing my *ss off at the BLS employment report which claims that 147,000 new construction jobs were created in the economy in the latest reporting month?  (My friend Steve Quayle calls these FFFT's - freakin' financial fairy tales...).  Not surprisingly, a reader sends this:

Hi George:

I went to the "net" tables that you linked (you provide some great links) regarding construction jobs, and if I'm understanding the table right, it flies in the fact of a report put out today on employment by ADP.

from: http://money.cnn.com/news/newsfeeds/articles/marketwire/0336237.htm 

Extract:  "Prakken added, "Two sectors of the economy hit hardest by recent problems in mortgage markets have been residential construction and financial activities related to home sales and mortgage lending. Today's data suggest that in these two crucial sectors employment may be stabilizing. In November, construction employment fell for the twelfth consecutive month, but November's decline of 6,000 was the smallest since January. Furthermore, construction employment has accelerated (has become less negative) in each of the last three months. Employment in financial activities, which declined by 16,000 from July through October, reversed course and grew 10,000 in November."

Unless I'm missing something, this is in direct contradiction to the BLS chart at your link. The above link and quote is from an ADP survey. Which one is correct?

Fine question: While the ADP report seems more likely correct (and remember, there's a lot of seasonal hiring for Christmas in their overall +189,000 figure for the whole economy) I'll let you in on a new pet theory of how BLS could conclude that there was a hiring increase in construction - this is just a theory mind you:  What if the construction industry was actually putting people on the payrolls who were formerly illegals working off books?  Well, OK, it's not likely, but it's the only reason for the wide disparity that I could think of...

Web Bot Hit: Gold Audit Call

Not that it comes as any surprise to HPH web bot readers, given that the predictive linguistics over at www.halfpasthuman.com has been talking about fall/winter demands for an audit of US gold holdings, but here's the first big announcement of what is developing:

GATA Begins Campaign to Wrest Gold Documents from Fed, Treasury

MANCHESTER, Conn. & DALLAS--(BUSINESS WIRE)--The Gold Anti-Trust Action Committee Inc. has begun a campaign to use the federal Freedom of Information Act to reveal the disposition of United States gold reserves.

On Thursday, December 6, GATA delivered to the Federal Reserve Board and the Treasury Department formal requests for access to all documents in their possession that have been generated since 1990 and mention swaps of gold involving the U.S. government. Such swaps of gold are commonly used by governments to intervene surreptitiously in the gold and currency markets, and in May this year provisions for swaps began to be cited in Treasury Department records of the U.S. government's international financial reserve position: http://www.gata.org/node/5637.

GATA's requests seek not only any documents showing gold swaps but also any documents identifying the legal authority for swaps and any documents describing the U.S. government's policy for engaging in them. "These requests to the Federal Reserve and the Treasury are only the first we plan to make to seek a full accounting of the U.S. gold reserve," GATA Chairman William J. Murphy III explains. "We also plan to ask for documents involving gold loans and leases and any other possible impairments of the gold reserve.

"That reserve has not been audited in 60 years, even as intervention by governments in the currency and gold markets has been increasing dramatically. Investors have the right to know exactly what the U.S. government is doing to affect what are supposed to be free markets. And the U.S. gold reserve is part of the national patrimony, the birthright of every citizen. All we want is the truth. Who can be against that?" GATA's FOI requests were prepared by the McLean, Virginia, law firm of William J. Olson, P.C., in association with GATA's consultant, the constitutional scholar and lawyer Edwin Vieira Jr., author of the monetary history of the United States, "Pieces of Eight."

If the Fed and the Treasury fail to respond to the requests in a reasonable time, refuse to provide the documents sought, or provide documents with excessive redactions, GATA can bring the agencies to court. "This campaign for the truth will incur substantial expense for GATA," Murphy says. "So as always GATA will be grateful for contributions from its supporters."

Since GATA is recognized by the U.S. Internal Revenue Service as a tax-exempt educational and civil rights organization, contributions are federally tax-deductible in the United States. Information on contributing to GATA is available here: http://www.gata.org/node/16.

GATA's request to the Federal Reserve has been posted on the Internet here: http://www.gata.org/files/GATA-FOI-Fed-120607.pdf.

Not that the questions GATA is asking to 'swaps' is the only question about US gold holdings.  I've wondered for some time whether the term "deep storage" of gold means something like 'still in the mine', but that's another chat sometime.

One Other Bot Hit

"Press turning on Bush" comes through the predictive linguistics as due in about this period:  Does "Keith Olbermann Special Comment:  Bush is a liar or idiot" on MSNBC this week qualify?

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We're still hopping to be wrong about pending drama (Of the "OMG will they make it?" kind) with the Atlantis flight now scheduled for Sunday.

Unfriendly Climate

The Wall Street Journal may have this headline right: "Hot Air in Bali" where the whatever-they-are meetings are going on.  Despite research showing a lot of global warming is due to off planet changes (e.g. changes on the sun and such) the UN meetings coincide with rallies and such.

Am I the only one who figures this whole extravaganza by the climate worry manipulators could have been done via a massive internet chat session/video conferencing and some real responsibility and commitment toward lifestyle change could have been demonstrated?

High Mileage Hijacked

Speaking of meaningful change:  In the District of Corruption, we can't help but notice that a House-passed energy bill which would mandate a 40% improvement in car mileage has been blocked in the Senate.  The Senate, no doubt listening to the lobbyists (a/k/a/ the horsesh*t whisperers) will water things down to a free lunch and magic - forget taxing oil companies more or demanding 15% of electrical energy comes from wind and solar. 

Another Debt Worry

Not just subprime spreading to prime borrowers - student loan paybacks are a worry now too.

Paybacks

United Healthcare's former CEO is paying back $600 million worth of option money, keeping $800 million.  Options back-dating issue.

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Coping: The Three Sisters

You don't really think we're going to talk about the three mountains in Oregon?  Wrong!

Hi George:

The eastern native Americans grew "The Three Sisters," corn, pole beans, and winter squash (think pumpkins) in the same patch. I've found an heirloom variety of corn, "Bloody Butcher," that is ideal. It grows some 9-10 ft high for plenty of space for the pole beans, has many sets of very sturdy prop roots (less likely to be blown down in a downdraft), and the dry dent corn makes an excellent cornbread. Plant corn in rows some 30-36" apart, thin to about every 18 inches, and plant pole beans when corn is 3-4 ft high. I like "Rattlesnake" and "Christmas Lima" pole beans. The latter is pictured on the dust cover of Barbara Kingsolver's great book "Animal, Vegetable, Miracle" about growing and raising your own food. I shell the pole beans as they mature, before they dry, and freeze. This reduces cooking time down to about 1/2 hour.

And a follow up email on the Jerusalem artichokes mentioned in Friday's snip and save:

"Keep in mind the 'sugar/starch' in them is a form of insulin....

Thus they may be helpful for the diabetic...."

Don't know the details and can't vouch for this, so check it out for yourself...

Send along contributions to george@ure.net

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Friday December 7, 2007

Housing Bust: It Ain't Over

While Treasury Secretary Hank Paulson et al were trying to sound cheerful enough to fool the stock market into another day of rally based on the notion that government can prevent the crisis from dragging the country into a hard landing, there was another chorus of Moody's blues on Thursday as they released a forecast saying housing prices nationally could drop 30% before bottoming.  Now, I ask you:  When does a recession turn into a depression?

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OK, so that's an open question.  But, what's not is at least a recession is coming in 2008 says the outlook from Chapman University's Anderson  Center for Economic Research.  One of my genius-level sources pointed out this:

"With sluggish income growth and rapid home price appreciation, housing affordability index deteriorated sharply since 2002. In 2006, a potential homebuyer with median family income of $76,300 needed 49.9 percent of family income to purchase a median single-family home, even after taking into account the tax savings of deducting mortgage interest and property taxes."  (page 5 - G)

Lovely, just friggin' lovely.  Half of your income needed for the mortgage.  Like to thank the republicorp for the fine rise and housing bubble while I'm at it.  Say, speaking of 'them' what do you say we look at the employment figures, huh?  Bound to be splendid, marvelous, and as always, 'better than expected'.  Damn, I love statistics...

Employment: More Good news

Duh.  If you're a true believer in the grand illusions, you'll love this:

"Nonfarm payroll employment continued to trend up in November (94,000), and the unemployment rate held at 4.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job growth continued in professional and technical services, health care, and food services. Employment continued to decline in manufacturing and also fell in several housing-related industries, including construction, credit intermediation, and real estate. Average hourly earnings rose by 8 cents over the month.

Unemployment (Household Survey Data)

The number of unemployed persons (7.2 million) was about unchanged in November, and the unemployment rate was 4.7 percent for the third month in