United Banana Republic of America: Government and Service Jobs for All!

[GRG55]

Re: United Banana Republic of America: Government and Service Jobs for All!

The UBRA flag explained:

Around these parts the US folks I know have a slightly nicer way to say "Do as we say or we'll blow you up"...

..."Be nice to us Americans. Or we'll bring democracy to YOUR nation".

[FRED]

Re: United Banana Republic of America: Government and Service Jobs for All!

The UBRA flag explained:

[Jim Nickerson]

Re: United Banana Republic of America: Government and Service Jobs for All!

From Alan Abelson's Barron's column 10/8/07

http://online.barrons.com/article/SB...gazine_columns

EUPHORIA WAS STILL IN THE AIR on Friday when the Street responded to September's employment report. And there were modest grounds for celebration as payrolls expanded by 110,000, especially after the initial gloomy August tally of 4,000 fewer jobs (revised to a 89,000 gain; July enjoyed a revised boost as well).

Unlike so many months this year, "phantom" additions, courtesy of the infamous birth/death concoction, devised supposedly to catch the effect on employment of new businesses and deceased ones, were trivial, puffing up the total by only 17,000. Average hourly earnings rose a heartening 0.4% (Mr. Bernanke may not view it as heartening, but that's what happens when the only people you talk to are hedge-fund managers and market strategists).

On somewhat closer scrutiny, the numbers certainly didn't merit all that much of a hurrah. But, hey, if investors are willing to cheer huge write downs how can they do anything but cheer what our savvy friends at the Liscio Report, Philippa Dunne and Doug Henwood, dub a "fairly weak employment report"? And that's apart from the up tick in the unemployment rate to 4.7%.

For one thing, as Doug and Philippa note, private employment was more or less stagnant. The big gainers were once again that dubious duo of health care and bars and restaurants, which hire freely and pay rather skimpily. The two chipped in more than half the overall rise. Government weighed in with 37,000 jobs (and was responsible for just about all the upward revision to the July and August totals).

Manufacturing continued to shed jobs rather vigorously, with some 60,000 slots getting the ax the past two months alone. There were fewer retail hires and, unsurprisingly, pink slips were the order of the day in building materials and finance (think mortgages and write downs). Temps downsized by a pretty hefty 20,000, which Philippa and Doug see as a bad omen for job gains in the future.

While not sharing the "extreme alarm" voiced by some professional kibitzers at August's initial negative tally, they did think that report "had a pre-recession look to it." And, they add, "We have similar feelings about this one."

[FRED]

Re: United Banana Republic of America: Government and Service Jobs for All!

Delving further into the employment data shows that the birth-death model adjustment was responsible for the turnaround in August employment. The birth-death model (BDM) added 120,000 ficticious jobs in August, and backing out the BDM adjustment would have led to a decline of 31,000 jobs for the month. The BDM adjustment for September payrolls was much smaller, coming in at 17,000 jobs.

Figure 2

Source: Moody’s Economy.com

September Employment Rebound Lifts Market

[Jim Nickerson]

Re: United Banana Republic of America: Government and Service Jobs for All!

Sy Harding, 10/5/07 http://www.decisionpoint.com/TAC/HARDING.html

Also of interest, the monthly jobs numbers have the record for creating more triple-digit one-day moves by the market in one direction or the other than any other set of economic numbers. But just as often the initial knee-jerk reaction is reversed within a day or so. For instance, last month's report that 4,000 jobs had been lost sent the Dow tumbling 250 points that Friday. It was back to the upside Monday, and within four days had gained 311 points, the jobs numbers long forgotten as other economic reports became the focus.
I suspect that Friday's better than expected jobs numbers will be forgotten just as quickly, especially with 3^rd quarter earnings reports due to begin next week, following what has been a fairly ugly 'earnings warning period' the last few weeks.
Even as the market was focused on the jobs numbers, more such warnings were released on Friday. Among them, Merrill Lynch warned it will take a humongous $5.5 billion dollar write-down against 3^rd quarter earnings, due to losses related to sub-prime mortgages and "loans to highly indebted companies". Washington Mutual, one of the nation's largest banks, added its sad tale to the list of major banks warning of huge losses lately. It was reported that Federal prosecutors have launched a criminal investigation into the operation of the two Bear Stearns hedge funds that collapsed this summer. Alcoa warned it will take $845 million in charges against earnings in its 3^rd quarter earnings report. And that was just in one day.
Perhaps investors should not have been quite as focused on the jobs numbers.

[jk]

Re: United Banana Republic of America: Government and Service Jobs for All!

from
http://suddendebt.blogspot.com/

The "eagerly awaited" BLS employment report came out exactly as expected at +110.000 jobs for the month, though the month of August was revised at +89.000 vs. -4.000. The revision had to do almost entirely with the number of teachers going back to work, which was originally estimated too low. However, the relevant data one needs to look at in order to gauge the economy is the number of jobs added by the private sector.

Here is a chart comparing the jobs created during each of the first 9 months in 2005, 2006 and 2007. For the 9m year to date, 2007 is down 49% from 2005 and down 40% from 2006.

[EJ]

Today we roll out our United Banana Republic of America (UBRA) flag as we dig into the Labor Department's numbers to see where all these jobs came from, but the fact is that our projection yesterday of today's payroll numbers was wrong.

The good news: unemployment is only slightly up. The bad news: the banana republicization of America is proceeding apace.

Payrolls Pick Up by 110,000 but Not Enough to Stop Jobless Rate From Rising to 4.7 Percent

The new job market snapshot released by the Labor Department on Friday showed that employers boosted payrolls by 110,000, the most in one month since last May. In an encouraging note, the economy actually added 89,000 jobs in August. That marked an improvement from the net loss of 4,000 that the government first estimated.

To be sure, the ill effects of these problems are showing up at some companies. Construction firms cut 14,000 jobs in September, Factories slashed 18,000. Retailers got rid of just over 5,000 jobs. Financial services companies eliminated 14,000 slots.

However, gains in education and health services, professional services, leisure and hospitality, and in government work more than offset those losses, leading to a net gain in new jobs in September.

The magic of a depreciating currency is working. Foreign investors are buying UBRA stocks and other assets at fire sale prices. Tourism is up as visitors from Asia, Europe, Canada and all other countries whose currencies have appreciated against the bonar flock to visit the US for a cheap UBRA vacation, driving leisure and hospitality jobs within the service sector where most of the job growth occurred.

Like any banana republic that depreciates its currency to give the economy a temporary boost, as the private sector–especially the goods producing sector–of the economy shrinks the UBRA government employs more of its citizens directly and through companies that contract to the government, especially as elections approach.

The payroll numbers today extend a trend that started with post 2000 stock market crash re-inflation policies. Of 140 million jobs in the US economy, approximately 50 million, or 36%, are in the goods producing, construction, and manufacturing sectors. The rest are in finance, retail, services, or government. At 22 million, total government employment is now at parity with the goods producing sector.

There is little reason to believe that the banana republicization of America will not continue. As long as it does, the UBRA may be able to avoid recession. We will look into other employment data before considering a delay in our forecast of a Q4 2007 recession.

There is one fly in the tropical rum drink. Today's labor department report also showed: "Wages, meanwhile, rose solidly."

Suppression of wage increases has been the centerpiece of monetary and government policy to manage inflation in the Production/Consumption Economy since 1980. Given the difficulty in acquiring legitimate measures of actual inflation rates in the US economy, there is no way of telling whether these wage increases translate into increased purchasing power. Given the rise of oil and other commodity prices, it seems doubtful. In fact, it looks like the UBRA is going full-bore banana republic, including wage and price inflation to maintain employment going into an election year.

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