The Global Economic Crisis: Financial Fraud has Become Increasingly Pervasive

Wednesday, January 12, 2011
By Paul Martin

By: Bob Chapman
Market Oracle
Jan 12, 2011

The U6 number fell to 16-7/8% from 17% last month, thus, the real unemployment number is 22-1/4%, off 3/8 of 1 percent in two months. The average duration of unemployment heads back up to a new record 34.2-weeks and when the share of the unemployed ranks looking for a job without success rises 2% to 44.3% you have a problem. It is hardly a winner. The workweek was unchanged at 34.3-hours. The employment rate was 58.3%, the same level it was at late in 1983. In order to re-ascend to peak employment levels 11 million jobs would have to be created. That cannot happen as the transnational conglomerates execute free trade, globalization, offshoring and outsourcing. That would be 2.75 million jobs annually over the next four years. Still millions of illegal aliens are streaming across our borders to find work and push American citizens out of their jobs.

There has been a decline in the number of jobless claims, but layoffs of state, country and city employs has added to the jobless, some 20,000 a month. Even with all the funds being injected into the system, the economy is still stagnant. The municipal layoffs will become acute in the last quarter of the year and carry over into 2012, as more and more towns, cities and states seek protection from bankruptcy.

Personal income is stagnant, as are hours worked, as inflation increases robbing workers of purchasing power, thereby negatively affecting consumption. Adding to this discouraged workers hit a record high of 1.32 workers. If it were not for extended unemployment benefits we might just be approaching revolution. You can throw in food stamps as well for 44 million Americans; 16% of the elderly are below the poverty line and 15.7% of the public is in the same boat.

Last week the Dow rose 0.8%, S&P gained 11.1%, the Russell 2000 gained 0.5% and the Nasdaq 100 jumped 2.7%. Banks gained 1.3%; broker/dealers gained 2.0%; utilities 0.9% and the high-tech 2.5%; semis 3.4%; Internets 3.1% and biotechs 0.8%. Gold bullion fell $51.00, the HUI lost 7.2% and the USDX gained 2.6% to 81.08.

The two-year US-T bill was unchanged at 0.59%, the 10-year T-note rose 3 bps to 3.33%, and the 10-year German bund fell 9 bps to 2.87%.

This year foreign governments will finally realize that Europe and the US won’t be able to repay most of their debts. In Europe, during the first 6-months of the year, countries will be stressed to pay back debt. All of the funding necessary won’t be available and the six with debt problems will need more assistance from the more solvent EU countries, the ECB and the IMF. There will be negotiations concerning how to solve this problem throughout the remainder of the year. The damage to European countries will be staggering. Not only will the debtor countries be hanging on by a thread, but due to a massive funds outflow the solvent countries will be in trouble as well.

The Rest…HERE

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