l****z
发帖数: 29846 | 1 September 18, 2013 by Michael Becker
The President is running around on his latest campaign swing making speeches
about how great a job he’s done on the economy and how much better it
would be if the damn Republicans would just see the light. One of his
favorite things to point out is the Dow Jones Industrials, and they hit a
new high today.
Let me get right down to brass tacks. The economy is in a world of hurt and
the stock market is being propped up by the Federal Reserve and it – along
with housing – is in another bubble and they ARE going to burst. I don’t
know when, but the fuse is lit and it’s just a matter of time.
For starters, let’s look at all those jobs that President Obama says he’s
been busily creating. Here’s what Reuters had to say.
WASHINGTON, Aug 21 (Reuters) – U.S. businesses are hiring at a robust
rate. The only problem is that three out of four of the nearly 1 million
hires this year are part-time and many of the jobs are low-paid.
Faltering economic growth at home and abroad and concern that President
Barack Obama’s signature health care law will drive up business costs are
behind the wariness about taking on full-time staff, executives at staffing
and payroll firms say.
We’re becoming a “part-time nation” thanks wholly to this President. Or
maybe we’re just becoming a “couch-potato nation” because the number of
people in the workforce keeps falling like a rock. The unemployment rate is
7.3% right now, but if we had the same number of people in the workforce as
we did on the day President Obama took office, unemployment would be about
11.5%.
The official U.S. unemployment rate is falling, but that’s not
necessarily a good thing.
That’s because the slice of Americans involved in the labor force has
shrunk to a level not seen in 35 years.
The labor force participation rate — the percentage of people over 16
who either have a job or are actively searching for one — fell to 63.2% in
August. The last time it was that low was in August of 1978.
The only reason that anybody is able to talk about a “good” economy is
because the stock market is doing well and the housing market appears to be
recovering. Well, that and the administration is lying about jobs and
business expansion. The reason the stock market is doing well is because the
Federal Reserve is buying US Treasuries and mortgage backed securities like
there’s no tomorrow and we are in essentially a “zero interest rate”
market. The purchases are called “Quantitative Easing”, a made up term
with no real meaning.
The truth about the stock market is that it keeps rising only because the
Fed is pumping “money” into the market. The truth about the “housing
recovery” is that sales are pumped by low mortgage rates only because the
Fed is buying mortgage backed securities at historically low rates.
Taper MarketA zero interest rate market will not continue. It can’t. When
the Fed stops buying, interest rates will go up dramatically, the stock
market will drop like a rock and the housing market will be faced with much
higher interest rates which will depress prices dramatically. Over the past
five years every time the Fed even talks about slowing purchases (called “
tapering”) the stock market drops. When they say “Nah, we’re not gonna do
that…” the market goes back up. The market doesn’t move on the
fundamentals of the companies being traded, it’s moving on action by the
Federal Reserve. The chart to the right is what happened to the Dow today.
The flat part on the left was the morning opening and economists were
expecting the Fed to announce they were going to start tapering. The big
spike was the moment they announced they weren’t. Here’s the lede from
CNBC.
An economy still stumbling toward recovery was not enough to sway the
Federal Reserve, which defied market expectations Wednesday and said it will
not begin pulling back on its monthly asset-purchasing program.
Stocks surged on the news but bond yields were flat.
“This is incredibly wimpy,” David Kelly, chief market strategist at
Morgan Stanley, told CNBC.
The Fed said it was unsatisfied with the pace of economic growth and
felt the timing was not right to make a change in quantitative easing.
I wouldn’t recommend reading the whole article without alcohol.
The economy is teetering because of over regulation and ObamaCare. The
President isn’t doing anything to reverse either of those problems. Things
are going to get a whole lot worse before, if, they ever get better. |
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