Tag: finance

 

Lord VoldeMao…

 

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/D2rhah7YFRs/story01.htm williambanzai7

As one might have expected the tension during the most recent FOMC meeting was palpable in the minutes as opposing dovish and hawkish less dovish views on the costs and benefits (and non-comprehension of the machinations) of QE were evident.

• *FED OFFICIALS SAW WANING BENEFITS FROM MONTHLY BOND PURCHASES
• *MANY FOMC MEMBERS FAVORED QE TAPERING IN `MEASURED STEPS’
• *MOST FOMC PARTICIPANTS WERE MORE CONFIDENT IN JOB MARKET GAINS
• *FOMC PARTICIPANTS `MOST CONCERNED’ ABOUT QE RISKS TO STABILITY

The likely path of tapering seems clear (and mention of extending the reverse repo facility is notable) but how forward guidance will be implemented remains the hottest topics and Eurodollar prices suggest the latter even more so than the former.

Pre-FOMC Minutes: S&P Futs 1832.0, Gold $1225.5, 10Y 2.995%, EURUSD 1.3570, USDJPY 104.95

Here are the key sections:

The staff presented a short briefing summarizing a survey that was conducted over the intermeeting period regarding participants’ views of the marginal costs and marginal  efficacy of asset purchases. Most participants judged the marginal costs of asset purchases as unlikely to be sufficient, relative to their marginal benefits, to justify ending the purchases now or relatively soon; a few participants identified some possible costs as being more substantial, indicating that the costs could justify ending purchases now or relatively soon even if the Committee’s macroeconomic goals for the purchase program had not yet been achieved. Participants were most concerned about the marginal cost of additional asset purchases arising from risks to financial stability, pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk-taking in the financial sector. It was noted that the risks to financial stability could be somewhat larger in the case of asset purchases than in the case of interest rate policy because purchases work in part by affecting term premiums and policymakers have less experience with term premium effects than with more conventional interest rate policy. Participants also expressed some concern that additional asset purchases increase the likelihood that the Federal Reserve might at some point suffer capital losses.

Shouldn’t the Fed never, ever mention the possiblity of capital losses as it immediately becomes a self-fulfilling prophecy? It continues:

… it was pointed out that the Federal Reserve’s asset purchases would almost certainly provide significant net income to the Treasury over the life of the program, especially when the effects of the program on the broader economy were taken into account, and that potential reputational risks to the Federal Reserve arising from any future capital losses could be mitigated by communicating that point to the public.

So, as long as the public knows that the Fed’s DV01 of $3 bilion can and will lead to massive balance sheet losses, all will be well?

The punchline:

Regarding the marginal efficacy of the purchase program, most participants viewed the program as continuing to support accommodative financial conditions, with a number of them pointing to the importance of purchases in serving to enhance the credibility of the Committee’s forward guidance about the target federal funds rate. A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue, although some noted the difficulty inherent in making such an assessment. A couple of participants thought that the marginal efficacy of the program was not declining, as evidenced by the substantial effects in financial markets in recent months of news about the likely path of purchases.

Uhm yeah: remember “The Fed Now Owns One Third Of The Entire US Bond Market“, and that the Fed now has a DV01 of over $3 billion. Someone at the Fed finally got the memo.

On the Overnight Reverse-Repo Facility:

… the Committee considered a proposal to increase the caps on individual allocations in the ON RRP test operations from $1 billion to $3 billion per counterparty. The proposed increase in caps was intended to test the Desk’s ability to manage somewhat larger operational flows and to provide additional information about the potential usefulness of ON RRP operations to affect market interest rates when doing so becomes appropriate. Participants generally supported the proposal, with one participant emphasizing the usefulness of extending the end date of the program beyond the end of January. However, some participants questioned the extent to which the proposed limited increase in the caps would provide additional insights about the operational aspects of the ON RRP program or the potential market effects of ON RRP operations. A few participants suggested that it would be useful to evaluate the potential role of an ON RRP facility in the context of the Committee’s plans for monetary policy implementation over the medium and longer term.

Usefulness? Why window dressing of course.

Remember peak uncertainty? “The staff viewed the uncertainty around the projection for economic activity as similar to its average over the past 20 years.” So much for that.

Finally, some housing market perspectives:

The pace of activity in the housing sector appeared to continue to slow somewhat, likely reflecting the higher level of mortgage rates since the spring. Starts for both new single-family homes and multifamily units increased, on balance, from August to November, but permits—which are typically a better indicator of the underlying pace of construction—rose more gradually than starts over the same period. Sales of existing homes and pending home sales decreased further in October, although new home sales rose in October after falling markedly in the third quarter….  Mortgage rates rose over the intermeeting period to levels about 100 basis points above their early-May lows. On balance, refinancing applications were down substantially since May while purchase applications declined much less. House prices rose significantly in October, but  some indicators suggested that the pace of house price gains continued to decelerate relative to earlier in the year.

Full minutes below:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BwkhPJ8ZhcA/story01.htm Tyler Durden

As one might have expected the tension during the most recent FOMC meeting was palpable in the minutes as opposing dovish and hawkish less dovish views on the costs and benefits (and non-comprehension of the machinations) of QE were evident.

• *FED OFFICIALS SAW WANING BENEFITS FROM MONTHLY BOND PURCHASES
• *MANY FOMC MEMBERS FAVORED QE TAPERING IN `MEASURED STEPS’
• *MOST FOMC PARTICIPANTS WERE MORE CONFIDENT IN JOB MARKET GAINS
• *FOMC PARTICIPANTS `MOST CONCERNED’ ABOUT QE RISKS TO STABILITY

The likely path of tapering seems clear (and mention of extending the reverse repo facility is notable) but how forward guidance will be implemented remains the hottest topics and Eurodollar prices suggest the latter even more so than the former.

Pre-FOMC Minutes: S&P Futs 1832.0, Gold $1225.5, 10Y 2.995%, EURUSD 1.3570, USDJPY 104.95

Here are the key sections:

The staff presented a short briefing summarizing a survey that was conducted over the intermeeting period regarding participants’ views of the marginal costs and marginal  efficacy of asset purchases. Most participants judged the marginal costs of asset purchases as unlikely to be sufficient, relative to their marginal benefits, to justify ending the purchases now or relatively soon; a few participants identified some possible costs as being more substantial, indicating that the costs could justify ending purchases now or relatively soon even if the Committee’s macroeconomic goals for the purchase program had not yet been achieved. Participants were most concerned about the marginal cost of additional asset purchases arising from risks to financial stability, pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk-taking in the financial sector. It was noted that the risks to financial stability could be somewhat larger in the case of asset purchases than in the case of interest rate policy because purchases work in part by affecting term premiums and policymakers have less experience with term premium effects than with more conventional interest rate policy. Participants also expressed some concern that additional asset purchases increase the likelihood that the Federal Reserve might at some point suffer capital losses.

Shouldn’t the Fed never, ever mention the possiblity of capital losses as it immediately becomes a self-fulfilling prophecy? It continues:

… it was pointed out that the Federal Reserve’s asset purchases would almost certainly provide significant net income to the Treasury over the life of the program, especially when the effects of the program on the broader economy were taken into account, and that potential reputational risks to the Federal Reserve arising from any future capital losses could be mitigated by communicating that point to the public.

So, as long as the public knows that the Fed’s DV01 of $3 bilion can and will lead to massive balance sheet losses, all will be well?

The punchline:

Regarding the marginal efficacy of the purchase program, most participants viewed the program as continuing to support accommodative financial conditions, with a number of them pointing to the importance of purchases in serving to enhance the credibility of the Committee’s forward guidance about the target federal funds rate. A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue, although some noted the difficulty inherent in making such an assessment. A couple of participants thought that the marginal efficacy of the program was not declining, as evidenced by the substantial effects in financial markets in recent months of news about the likely path of purchases.

Uhm yeah: remember “The Fed Now Owns One Third Of The Entire US Bond Market“, and that the Fed now has a DV01 of over $3 billion. Someone at the Fed finally got the memo.

On the Overnight Reverse-Repo Facility:

… the Committee considered a proposal to increase the caps on individual allocations in the ON RRP test operations from $1 billion to $3 billion per counterparty. The proposed increase in caps was intended to test the Desk’s ability to manage somewhat larger operational flows and to provide additional information about the potential usefulness of ON RRP operations to affect market interest rates when doing so becomes appropriate. Participants generally supported the proposal, with one participant emphasizing the usefulness of extending the end date of the program beyond the end of January. However, some participants questioned the extent to which the proposed limited increase in the caps would provide additional insights about the operational aspects of the ON RRP program or the potential market effects of ON RRP operations. A few participants suggested that it would be useful to evaluate the potential role of an ON RRP facility in the context of the Committee’s plans for monetary policy implementation over the medium and longer term.

Usefulness? Why window dressing of course.

Remember peak uncertainty? “The staff viewed the uncertainty around the projection for economic activity as similar to its average over the past 20 years.” So much for that.

Finally, some housing market perspectives:

The pace of activity in the housing sector appeared to continue to slow somewhat, likely reflecting the higher level of mortgage rates since the spring. Starts for both new single-family homes and multifamily units increased, on balance, from August to November, but permits—which are typically a better indicator of the underlying pace of construction—rose more gradually than starts over the same period. Sales of existing homes and pending home sales decreased further in October, although new home sales rose in October after falling markedly in the third quarter….  Mortgage rates rose over the intermeeting period to levels about 100 basis points above their early-May lows. On balance, refinancing applications were down substantially since May while purchase applications declined much less. House prices rose significantly in October, but  some indicators suggested that the pace of house price gains continued to decelerate relative to earlier in the year.

Full minutes below:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BwkhPJ8ZhcA/story01.htm Tyler Durden

As the world prepares to comprehend, in their own recency-biased manner, the minutes of the most recent FOMC meeting, we thought it worth a reminder of just how Fed communications have ballooned in the past 20 years. The first statement, issued on Feb. 4, 1994, was a mere 99 words. December’s ‘most important FOMC statement ever’ was a stunning (record) 867 words – and even so Jon Hilsenrath managed to interpret and write on it in 3 minutes. As we noted earlier, the minutes tend to be a platform for even greater ‘communication’ – and notably are not the actual minutes of the meeting but a prepared annotation of what the Fed wants the public to know about the meeting. Transparency and communications, it would appear, has been transformed from clarifying to endless caveat-ing.

 

Since 1994… notice the ‘kink’ when unconventional policy began

 

and it’s just gotten worse and worse as QE^ternity was launched.

 

All those words just to say – we’ll buy it all forever…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/-cqhXjaoYKs/story01.htm Tyler Durden

As the world prepares to comprehend, in their own recency-biased manner, the minutes of the most recent FOMC meeting, we thought it worth a reminder of just how Fed communications have ballooned in the past 20 years. The first statement, issued on Feb. 4, 1994, was a mere 99 words. December’s ‘most important FOMC statement ever’ was a stunning (record) 867 words – and even so Jon Hilsenrath managed to interpret and write on it in 3 minutes. As we noted earlier, the minutes tend to be a platform for even greater ‘communication’ – and notably are not the actual minutes of the meeting but a prepared annotation of what the Fed wants the public to know about the meeting. Transparency and communications, it would appear, has been transformed from clarifying to endless caveat-ing.

 

Since 1994… notice the ‘kink’ when unconventional policy began

 

and it’s just gotten worse and worse as QE^ternity was launched.

 

All those words just to say – we’ll buy it all forever…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/-cqhXjaoYKs/story01.htm Tyler Durden

The US may be blanketed in freezing cold, but the UK is already preparing for what should be a hot, dry summer. Either that, or the request of London mayor Boris Johnson to distribute water cannon on the street of the capital may be an indication that at least some major municipal centers are preparing for a jump in civil disobedience and are looking for appropriate, “non-lethal” means to contain it.

SkyNews reports that “the London Mayor says the weapons will be used only in “the most extreme circumstances”, however, there are fears the cannon could be deployed to break up small-scale legitimate protests. Mr Johnson says the water cannon are necessary in case there is a repeat of the summer riots of 2011.”

So “just in case.”

What happened in 2011? “The violent outbreaks and looting in cities across the country led David Cameron to warn that the machines could be used on the British mainland for the first time ever within 24 hours’ notice.”

The mayor has written a letter to the Home Secretary, Theresa May, who will be the one to make the decision on whether to licence the water cannon. For now the mayor’s request has been turned down:

There are plans to buy three water cannon at a cost of £30,000 each from German manufacturers, but Mrs May has turned down a request to pay for a Met Police weapon as a national asset.

The Metropolitan Police also mulled using water cannon during the student riots in London in 2010, however, Mrs May then said in the House of Commons: “I don’t think anyone wants to see water cannon being used on the streets of Britain.”

In the summer 4,000 Metropolitan Police officers attended training camps in Hampshire in how to use the water cannon so they could support their Northern Ireland counterparts ahead of the G8.

While water cannon has been used on the isles before, most notably in Northern Ireland for crowd control for some time, they have never been used on the British mainland. In his letter the mayor told Mrs May he was consulting the public and key figures on the use of the water cannon and was “broadly convinced” by the idea. He said: “Should the engagement plan reveal serious, as yet unidentified, concerns I will, of course, take these into consideration and share them with you before you make any decision to licence this non-lethal tool.”

The opposition, sufficiently vocal, seems mostly for popular theatrics:

“London Assembly member Jenny Jones said: “Would the Mayor have supported the deployment of water cannon against students protesting against their fees going up?”

 

What happens if the Commissioner wants to deploy water cannon but the Mayor doesn’t? Londoners need to know when and in what circumstances the Mayor would agree with the Met using this weapon.”

 

“Allowing water cannon on the streets of London is a step in the wrong direction towards arming our police like a military force, and it goes against our great tradition of an unarmed police service. People have a democratic right to protest and my fear is that once the Mayor allows these weapons onto our streets we will see them being used against people exercising their legal right to protest.”

 

A spokeswoman for the Mayor’s Office for Policing and Crime (MOPAC) said: “Since the riots in August 2011 the police and the independent Inspectorate of Constabulary have argued that water cannon should be available as one of a range of tools to respond to serious public disorder.

 

“This is supported by the vast majority of the public. MOPAC will now be undertaking a period of public engagement to get the views of Londoners, prior to any final decision to purchase water cannon.”

The opposition has been duly noted. And now we await the final decision which will be made in February. We anticipate smooth sailing for the first of many water cannons to take to streets of London.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gpeAIwlRuns/story01.htm Tyler Durden

It appears that E-Trade has some log-in issues with its website, since for the past 15 minutes anyone who tries to log into their account, gets the following error screen.

As of this posting, it is unclear if the access denied this is a bug, a hack, or simply a test of the emergency preparedness system for when everyone tries to log in to sell… and just can’t log in. Whatever the reason, being unable to log into one of the widest used discount brokers 30 minutes ahead of the most important news event of the day is a nuisance for daytraders.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NDnCdUx2Lqw/story01.htm Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

"Conservatives" and "Progressives" alike are pimping for the Empire when they support the Central State's essentially unlimited powers.

Yesterday I described how so-called "Progressives" are pimping for the Empire. The same is true of so-called "Conservatives." (I am reprinting the intro for those who missed yesterday's essay.)

(I say "so-called" because the "Progressives" are not actually progressive, and the "Conservatives" are not actually conservative. Those labels are Orwellian double-speak, designed to mask the disastrous consequences of each ideology's actual policies.)

Let's begin by stipulating that ideology, any ideology, is an intellectual and emotional shortcut that offers believers ready-made explanations, goals, narratives and enemies without any difficult, time-consuming analysis, study or skeptical inquiry. This is the ultimate appeal of ideology: accepting the ideology relieves the believer of the burdens of analysis, skeptical inquiry, uncertainty/doubt and responsibility: all the answers, goals and narratives are prepackaged and mashed together for easy consumption.

This is one of the core messages of Erich Fromm's classic exploration of ideology and authoritarianism, Escape from Freedom.

And what is the essential foundation of authoritarianism? A central state. This is not coincidental.

What few grasp is the teleology of the centralized state: by its very nature (i.e. as a consequence of its essentially unlimited powers), the central state is genetically programmed to become an authoritarian state devoted to self-preservation and the extension of its reach and power.

This is why the Founding Fathers were so intent on limiting the powers of the Central State. They understood the teleology of the centralized state: by its very nature (i.e. as a consequence of its essentially unlimited powers), the central state is genetically programmed to become an authoritarian state devoted to self-preservation and the extension of its reach and power.

You can't cede unlimited, highly concentrated powers to the central state and then expect the state not to fulfill its teleological imperative to protect and extend its powers. The state with unlimited powers will be ontologically predisposed to view any citizen that seeks to limit its expansion of power as an enemy to be suppressed, imprisoned or marginalized.

The state with unlimited powers will be ontologically predisposed to protecting its powers by cloaking all the important inner workings of the state behind a veil of secrecy, and pursuing and punishing any whistleblowers who reveal the corrupt, self-serving workings of the state.

The state with unlimited powers will be ontologically predisposed to view any other nation or alliance as a potential threat, and thus the state will pursue any and all means to disrupt or counter those potential threats.

The state with unlimited powers will be ontologically predisposed to create and distribute propaganda to mask its self-serving nature and its perpetual agenda of extending its powers, lest some threat arise that limits those powers.

Democracy and a central state with unlimited powers are teleologically incompatible.

Though they piously claim to desire a limited State, conservatives cede it essentially unlimited powers because they want that state to be powerful enough to impose their agenda on others and reward their constituencies.

Conservatives are masters at projecting a preachy devotion to a limited state, democracy, liberty and free enterprise while their support of the Central State undermines every one of these values. Conservatives are like the preacher who issues stern sermons on righteousness every Sunday while skimming big money from pimping sordid, destructive policies Monday through Saturday.

Conservatives claim to want to limit the Central State, but their slavish support of Medicare, Social Security, the Pentagon, the National Security State, the Federal Reserve (and thus interest on the national debt), farm subsidies to Big Ag, law enforcement and the War on Drugs Gulag means they support virtually 100% of the Central State's unlimited powers. Their proposed "cuts" are farcically tiny slices designed for propaganda purposes–out of $4 trillion Federal budget, conservatives preach "austerity" while leaving the Empire and their crony-capitalist cartels entirely intact.

Conservatives claim devotion to national defense while actually having no interest in actual defense. Their sole interest is supporting their favored cartels and projecting a politically useful facade of being pro-national defense. In the real world, they support the revolving door between the Pentagon and defense contractors and profitable but ineffective weapons systems. Conservatives happily shove weapons systems down the nation's throat the Pentagon doesn't even want, all the while masking their crony-capitalist agenda behind pious claims of supporting the military.

That is particularly Orwellian: ignore the military's true needs in favor of funneling profits to your crony-capitalist pals. The same Orwellian agenda powers conservative support of the banking sector (conservatives never met a banking subsidy they didn't love), Big Ag, Big Pharma, Big Everything–conservatives will support any Big Business at the expense of the taxpayers and the national commons.

The one essential tool conservatives need to force their crony-capitalism on the citizenry is an powerful Central State–and so they support the essentially unlimited powers of the Central State with gusto, even as they bleat piously about the Founding Fathers.

The Founding Fathers had two primary concerns: foreign entanglements and the dangers of an unlimited Central State. So-called Conservatives are blind to the gap between the reality of their support of a Global Empire and an all-powerful Central State and the fantasy that they even understand the Founding Fathers' concerns, much less actively pursue them.

Conservatives are against Big Government except when Big Government benefits their constituencies. Boost the Pentagon budget by 10% a year, rain or shine, to counter every possible threat to the Empire, boost the National Security State (Homeland Security, NSA, etc.) every year, boost the War on Drugs Gulag annually, leave Medicare, Social Security and interest on the national debt as sacrosanct, and guess what–you've created a self-liquidating monster State.

Behind their preachy facade, conservatives have turned democracy into an auction of political favors. As they belly up to the limitless trough of central State revenues and power, conservatives have embraced the auction as the true mechanism of governance: banking statutes are written by banking lobbyists and then signed into law.

What is the difference between a so-called Progressive who tells us Congress has to pass a crony-capitalist healthcare law to find out what's in it and a so-called Conservative who pushes a banking law penned by lobbyists? There is none: both are pimps.

Once you cede unlimited, highly concentrated power to the central state, you get an authoritarian empire that is driven to protect itself from any threat at all costs–including democracy, though the state may maintain a facade of carefully managed "democracy" as part of its propaganda machinery.

You cannot have a state with essentially unlimited power and not end up with cartel-capitalism. So-called Conservatives defend their favored cartel-fiefdoms, yet these cartels are busy bankrupting the nation and destroying the very bedrock of the liberties Conservatives claim to hold dear.

Once you choose to cede essentially unlimited powers to the Central State, all decisions after that are made in service of the state. The idea that the state can be limited to national defense is illusory.

The only legitimate duties of the state are limited: 1) protect the commons from destruction and exploitation; 2) protect the citizenry from exploitation or oppression by those with superior power or resources; 3) maintain transparency in all governance and 4) maintain a system of sound money.

The so-called Conservatives will learn what the teleology of the state means in the real world when the state comes after them. Once you cede unlimited power to the central state, any attempt to limit that power marks you as an enemy.

Supporting the Central State to protect your favored cartels and protect your political power over the state's tax revenues is simply pimping for the Empire. You can call it "conservative," but it's still pimping for the Empire.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/u–dlVNwguk/story01.htm Tyler Durden

With the 10 Year When Issued trading comfortably above 3% around the time of today’s auction conclusion, it was expected that today we would see the first 10 Year auction, in the face of the WE6 9 Year 10 month reopening, pricing north of 3% for the first time since May 2011. Sure enough, moments ago the Treasury announced that it had sold $21 billion in benchmark paper at 3.009% tailing just slightly to the 3.007% When Issued. But while the yield was notable, the Bid To Cover actually picked up from last month’s 2.61 rising to 2.68, almost exactly in line with the TTM average of 2.69, and showing a modestly increase in recent BTCs. The internals were a snoozers, with Dealers getting 39.8%, one percent above the 12 month average, Indirects were allotted 46.6% – below last month’s 48.9% but above the 41.8% TTM average, and Directs got the balance, or 13.6% of the final allottment. Largely, a vanilla auction.

Perhaps the only notable item is to keep track of whether dealers sell it back to the Fed: during yesterday’s POMO, even though the OTR WE6 CUSIP was not part of the exclusions, dealers sold precisely $0 back to the Fed. Now that they have another $8 billion of the issue, expect this to change at the first possible POMO opportunity.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5JS9FEhbbt8/story01.htm Tyler Durden

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

The civilian labor force in the US has been causing bouts of hand-wringing and head-scratching. It represents the official number of people working or looking for work. It’s what the official unemployment rate (U-3) is based on. If labor force participation drops – if for whatever reason, millions of people are no longer counted as part of the labor force, as is the case in the US – it’s a troublesome indicator for the economy and the real employment picture.

It also makes the unemployment rate, now 7.3%, look a lot less awful: if you’re not counted in the labor force, and you don’t have a job, you’re not counted as unemployed. There are millions of people in that category. And their numbers are growing, not diminishing.

“The irony of the U-3 unemployment statistic is the fact that while unemployment has gone down 30% since its 2009 peak, we have the lowest labor force participation rate in over 3 decades,” observed Ralph Dillon, Vice President at Global Financial Data, in an email. “The markets and politicians celebrate the official unemployment rate, but you have to be concerned with the trend that is most indicative of the health of the employment situation in this country: the downward trend of those who want to work and can’t.”

Before the financial crisis, the unemployment rate and the labor force participation rate weren’t correlated. Unemployment would jump up and down, based on the economy, but labor force participation moved to its own drummer:

“During the 1970s and 1980s, the labor force grew vigorously as women’s labor force participation rates surged and the baby-boom generation entered the labor market,” explained the Bureau of Labor Statistics. The labor force participation rate hit an all-time peak in early 2000 of 67.3%. “However, the dynamic demographic, economic, and social forces that once spurred the level, growth, and composition of the labor force have changed….” And labor force participation has since dropped to 63%.

The chart (Global Financial Data) juxtaposes the unemployment rate and the labor force participation rate since 1980. After the financial crisis, suddenly, for the first time in history, they both started moving in lockstep. Downward.

 

 

“This chart is a true representation of the crisis of employment in this country,” Dillon wrote. The diminishing labor force participation rate – the officially available labor pool, however unrealistic it might be – has been driving down the unemployment rate for the first time in history.

But beneath the overall numbers, it’s even worse. This chart by the BLS depicts labor force participation rates in 1992, 2002, and 2012, with an estimate for 2022:

 

 

People 55 to 64 years old, the first forget-about-retirement generation, are staying in the labor force to an ever greater degree. In 1992, only 56.2% were still in the labor force, in 2012, 64.5% were. Similar for older folks. The participation rate for people 65 to 74 years old jumped from 16.3% to 26.8%. Reality is this: fewer people can afford to retire.

But who is not making it into the labor force? Young folks. The participation rate for those 16 to 19 has plunged from 51.3% in 1992 to 34.3% in 2012. OK, the BLS explains that by an increase in school attendance, and that would be a good thing. But the 25 to 54 year olds? Even among them, participation rates dropped from 83.3% in 2002 to 81.4% a decade later.

Among the 18 to 34 year old “Millennials,” those lucky ones who’re official counted in the labor force, unemployment has been a nightmare, with double digit unemployment rates, still, nearly 6 years after the financial crisis, reported the youth advocacy group Young Invincibles. It’s even worse for the 16 to 24 year olds, whose official unemployment rate is still 15%!

In prior downturns, the employment rate for young adults nearly reached pre-recession levels within 5 years. In the Great Recession, young adult employment had not even recovered halfway by the same point. A quarter of all job losses for young adults came after the Great Recession was officially over. The lack of jobs had driven many discouraged young people from the labor force altogether. A recent report by Opportunity Nation estimates that 5.8 million young adults are neither working nor in school.

Sure, companies have been creating jobs since the Great Recession, but only at the growth rate of the working-age population, as evidenced by the BLS’s dreary employment-population ratio. It peaked in April 2000 at 64.7%, crashed during the Great Recession, and has been skittering along the bottom ever since. At 58.6%, it’s lower than it was during most of 2009! And the 30% improvement in the official unemployment rate – where the heck did that come from? The chart has the answer: people 54 and younger being statistically purged from the labor force.   

Fed Chairman Bernanke wanted to reflect on the “accomplishments of the past eight years” and demolish “sceptics” that still doubted the Fed was the best thing since sliced bread. His policies “have helped promote the recovery,” he said. The recovery of what? Read…. Bernanke’s Delirious Praise For His Handiwork, The Concentration Of Power At the Top Banks

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/lxhqprqZnyY/story01.htm testosteronepit