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Unemployment and System Death

Published on June 8, 2010


“The system is dying. That much is evident. The idea that central bankers are independent is no more realistic than believing our political leaders are independent. Politicians –except for the very few—are captive to their own ambitions and to the special interests that allow them to parade on the public stage feeding their vanity and our sense of control. It’s a stage, however, that is about to collapse on everyone,” writes Darryl Schoon. Our future lifestyles will depend on how prepared we are to meet the beastly changes that will destroy economies, overthrow some governments, and alter the nature of the world.

The new British Prime Minister David Cameron warned in a speech of painful cutbacks that may shape the nation for an entire generation and are necessary because “the overall scale of the problem is even worse than we thought.” “How we deal with these things will affect our economy, our society — indeed our whole way of life,” he said. “The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades to come.” Someone is now starting to truth speak as Europe pivots away from the American lust for deeper and deeper debt.

“Few would argue that a major storm is on the horizon. But it’s hard to know how to batten down the hatches. No wonder so many investors are simply giving up, taking the term “bear market” to heart and heading for hibernation. America is rooting in the same pen as the PIIGS – Portugal, Italy, Ireland, Greece, and Spain. Spending one’s way out of debt didn’t work for U.S. homeowners, it didn’t work for those governments, and it won’t work for ours either,” writes Doug Hornig.

The 1000 point Flash Crash of the Dow Jones was a uniquely distinctive occurrence relative to anything we’ve ever experienced before in the world of finance. “What we’re about to witness will be startling and never before observed by this generation of investors. After only 30 days the Flash Crash signal has become unambiguous and historians will wonder why the public didn’t react sooner to its clarion call,” writes Anthony Cherniawski.

Bloomberg is reporting that unemployed Americans are facing the longest wait on record to find work; a sign faster economic growth is needed to reduce the jobless rate from close to a 26 year high. The average duration of unemployment jumped to 34.4 weeks in May from 33 weeks the prior month and 16.5 weeks in December 2007, when the recession began, a Labor Department report showed last week in Washington. The number of unemployed has almost doubled to 15 million since the start of the worst slump since the 1930s.

The numbers given by the Bureau of Labor Statistics don’t even pass the basic math test though. To top it all off, inside these figures is the CES Birth/Death Model, which added 215,000 fictitious jobs in May. Could the real employment situation have a loss of 216,000 jobs last month? In addition, the May figures showed the labor force shrank 322,000 due to discouraged people leaving the work force. The proportion of people jobless for six months or more has accelerated in the past year and now makes up 46 percent of the unemployed. That’s the highest percentage on records dating to 1948.

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The media pronounced the U.S. employment data as disappointing. Yet, “President Obama says the addition of 431,000 jobs (someone does not know how to count) in May proves “the economy is getting stronger by the day.” Yeah well, the economy actually lost 226,000 jobs, while 493,000 people gave up even looking for a job. How does anyone, let alone the president, have the audacity to tell a nation its economy is getting stronger by the day while jobs are lost left, right and center? That takes an accomplished liar, if you ask me. The US has fewer jobs today, not more, and that is clear to anyone willing to see it. And the stock markets are clear enough in their answer too. As I write this, markets are down a whopping wobbling 3% or more,’’ writes The Automatic Earth.

“…Can you imagine if during the cold war the Soviet Union had undermined all the countries, it would have been the start of World War III? And yet we are letting investment banks do the same thing. We are letting investment banks undermine the finances, cast doubt on the credibility, create civil unrest, riots, death. It’s the kind of thing that in a military frontal assault would be repelled, but somehow we let Wall Street attack the countries and do nothing about it. I am glad that someone is finally standing up, and I expect that Merkel will be joined by others,” said James G. Rickards.

The fraudsters and scammers in the banking and “finance” industry who sold you, and the nation, on the premise of ever-increasing debt being sustainable, should be the ones who are put out of business.

The promises made cannot be kept, not due to lack of political will but inability to continue to compound debt upon debt upon debt any longer. Karl Denninger

The Taipan Publishing Group writes, “Ladies and gentlemen, we no longer have to joke about the economy going to hell in a handbasket. We are IN the hand basket. This is the decay and the slow crumbling. This is the fall of Rome. You cannot have a functional economic system in which a critical mass of participants decide “not paying their debts” is okay. When the system is allowed to rot, the system eventually breaks down. In a culture where paying one’s debts and honoring one’s commitments is seen as a clear moral obligation, the rule of law is intact. When you lose that sense of cultural obligation though – when people start saying “Forget the home mortgage, let’s go have a steak and visit the casino” – the social fabric is torn asunder.”

What they are talking about are strategic defaulters who have the money but decide not to pay their mortgage. Instead of paying their debts they go out and party with the money and this is boosting spending and thus GNP. It is hard to judge people for the whole system is cracking up and trust and loyalty are drying up faster than a drop of water in a hot desert. Up to this point the government has been paying unemployment benefits way past when they normally cut it off, but it is now unclear whether they will continue to do so.

Many states have already run their unemployment funds dry and are having to borrow from the federal government. Many are hearing the clarion call or what might better be described as the bells of doom for many millions of people in the United States are unemployed and will probably never be fruitfully employed again. More immediately they are destined to lose their unemployment insurance lifeline, and food stamps only go so far. And this story is repeated around the world. The high and mighty from the first world are falling down and we have known for a while that the world cannot support them and now debt will not support them so we see system death approaching. Uncharted waters ladies and gentlemen.

Monty Pelerin writes, “We are witnessing the death of democratic socialism. No politician wants it to happen, but none can prevent it. We are at the point where the Ponzi concept of “extend and pretend” has been extended beyond social commitments and banking systems to entire economies. We are approaching what Ludwig von Mises described as “the crack-up boom”:

There is no means of avoiding the final collapse of a boom brought about by credit [debt] expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit [debt] expansion, or later as a final and total catastrophe of the currency system involved.

Pelerin concludes, “Political cowards around the world have chosen Mises’ second outcome — “a total catastrophe of the currency system involved.” None of the countries have the resources to continue to fund current programs. As their economies deteriorate, they will “print money” in order to continue meeting obligations and stimulating. At some point, the money supply will explode vis-à-vis the goods available.”

No one can be sure of the exact nature of future events but nothing is looking good and for Americans it is piling up against them while they are being kicked in the guts in the Gulf with a nightmare growing exponentially in dimension. Love will cope perhaps but governments are not going to be able to, not in the end so it will be the end of many of them at a certain point.

I hope my readers understand that I am writing and publishing all of this nightmarish stuff because I care and because it is my mission and dedication for the rest of my life to communicate and communicate about everything that touches my heart and nothing touches my heart more than the suffering of others even if they are on the other side of the world.

When I meditate I first bring in fresh consciousness into my brain and head, clearing away all thoughts in the process. I then drop down into my heart and my consciousness goes around the curvature of the earth to lock into an oneness feeling with everyone and everything that’s happening. I perceive much through the eyes of other writers, speakers and news agencies with a special emphasis on alternative sources that are not controlled by the mass media. So it’s sort of a group consciousness that I present when I quote so many others and it’s the same with my work in medicine.

Events are now moving faster and faster and in multi-dimensions. Ecological nightmares, earthquakes, volcanoes, tornadoes and war are threatening in multiple places and financial collapse still happening despite all the reassurances that everything was going to be just fine. What can we do but hang in there and prepare. When I published my Survival Medicine for the 21st Century compendium of 2,200 pages three and a half years ago I had not half the feeling of events that are now unfolding. Back then it was more conceptual but something hard is knocking at the door and we have to answer.

I want to close this essay with words from Mike “Mish” Shedlock:

Nothing But Hot Air
The G-20 meeting was useless. The market had already forced Europe’s hand with the action in credit defaults spreads in Greece, Portugal, and Spain as compared to Germany. The same thing happened in the UK when Gordon Brown was tossed out of office.

US, Japan, China Day of Reckoning is Coming
: Trichet’s comment that the best contribution to the global rebound is to achieve fiscal sustainability is certainly accurate. Unfortunately, that comment will fall on deaf ears as Geithner, Bernanke, and the Obama Administration clowns are completely clueless. At some point, the market will get extremely tough with the US, China, and Japan in regards to deficit spending, interest rates, currency pegs, and financing debt. However, there is no telling exactly when those days of reckoning will come or in what order they happen.

Kiss the Illusion Goodbye
: With global stimulus efforts playing second fiddle to default concerns, a double-dip recession is just around the corner. Please see Hungary Tries To Calm Markets; Europe Headed Back in Recession, US Will Not Decouple for further discussion.

The Keynesian clowns will be howling that reduced stimulus killed the recovery. However, the reality is there was no recovery in the first place, only an illusion caused by unsustainable stimulus.

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Dr. Mark Sircus AC., OMD, DM (P)

Director International Medical Veritas Association
Doctor of Oriental and Pastoral Medicine

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