Showing posts with label underground economy. Show all posts
Showing posts with label underground economy. Show all posts

Thursday, August 30, 2018

Stocks Take A Breather As Tariff Talk Toughens; Underground Economy, Self-Employment Rising Rapidly

This was not completely unexpected.

Markets have been absolutely on fire the past two weeks, and a pullback was inevitable. The culprit, as usual, will be Donald Trump, and his threat to slap tariffs on $200 billion of Chinese imports.

While the additional revenue will no doubt aid the fiscal formula of the federal government, the merger impact will be in the form of higher prices, though the effect will be spread out among America's 325 million populace.

Another way of looking at it is that $200 billion worth of Chinese goods spread among roughly 200 million adult Americans comes to $1000 per person. If you whack the goods another 25% with tariffs, it's another $250 per person. Over the course of six months or a year, it's not much, say five to 10 bucks a week.

Chump change... or maybe, Trump change.

An article that caught the eye today focused on the burgeoning self-employment movement in the United States, which has been growing at three times the rate of regular employment over the past three years.

Credit American ingenuity. Work is changing and more than a few people are trading in the nine-to-five grind for making their own hours, especially among Millennials and older, healthy retirees or semi-retired folks. With the burden of Obamacare taken off the backs of Americans, the workforce is free to follow the money, be it as a Uber driver, seller of goods on eBay, pushing online services, or a myriad of other self-employment opportunities, many of which are unregulated, untaxed, and unreported.

The so-called "underground economy" which the US government gave up trying to track in the mid-seventies, is enormous. Its presence and size puts to shame all the government employment statistics, especially the low "persons in the labor force" numbers that plagued the Obama years. Americans come in all stripes and flavors, from welfare recipients who do side jobs, to baby boomers who mow lawns for cash. Most of all, Americans are resourceful and many of them are overtaxed and seeking ways to increase their incomes without notifying the IRS or state governments.

It's working, and the money generated goes all through the economic powerhouse that is the US domestic economy. Governments - local, state, and federal - are all too big and they all waste people's time and money. The US population moved on years ago. Only now, it's getting to be so large that it's hard not to notice.

There probably aren't too many people who remember the years of Prohibition (1920-1933), when government over-reached, outlawing the sale and distribution of alcoholic beverages. By the mid 1920s, the "underground economy" of the day had exceeded the "official" government-tracked economy. We're on the same path today. People want more control of their lives and their money, and they're taking both back, with a vengeance.

No pension? No problem. Little league umpires make $30-60 per game and most of it is paid in cash. That's just one example.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79
8/20/18 25,758.69 +89.37 +351.16
8/21/18 25,822.29 +63.60 +414.76
8/22/18 25,733.60 -88.69 +326.07
8/23/18 25,656.98 -76.62 +249.45
8/24/18 25,790.35 +133.37 +382.82
8/27/18 26,049.64 +259.29 +642.11
8/28/18 26,064.02 +14.38 +656.49
8/29/18 26,124.57 +60.55 +717.04
8/30/18 25,986.92 -137.65 +579.39

At the Close, Thursday, August 30, 2018:
Dow Jones Industrial Average: 25,986.92, -137.65 (-0.53%)
NASDAQ: 8,088.36, -21.32 (-0.26%)
S&P 500: 2,901.13, -12.91 (-0.44%)
NYSE Composite: 13,039.93, -92.23 (-0.70%)

Friday, September 6, 2013

NFP Jobs Data Disappoints; Fed-Taper in Question; Liesman's Big Lie

Following an early-session smack-down and a subsequent rally, stocks came right back to terra firma at the close, ending the session essentially flat.

Non-farm payroll data and Middle east posturing were the main catalysts for the early decline, the rally had little catalyst othe than empty reassurances from the president, or Bomber-in-Chief, who, after Russian President Vladimir Putin said that his nation would support and defend Syria in the face of any attacks, promised, once again, that strikes against Syria would be measured and brief.

Mr. Obama speaks as if he's planning a family outing of some sort rather than an act of war against a sovereign nation and his posturing and promising is nauseating, misguided and insincere. While the congress dithers over whether to grant him authority - as it must under the War Powers Act - to bomb Syria, a nation that poses no imminent threat to US interests, the president continues to tiptoe toward conflict, one which is likely to inflame parties in an already-tense region.

Market reactions to the president and congress are equally superfluous and without much forethought. To date, the US has done nothing but threaten Syria. If it ever comes to actual bombing, then the market will make up its mind as to whether such actions have consequences for stocks and bonds.

The other contributing factor to today's rocky trade was the August Non-Farm Payroll report which showed the US gaining 169,000 new jobs, well below consensus, and revising June and July data lower. The BLS also advised that the labor force participation rate had fallen again, to 63.2%, a number not seen since 1978, thirty-five years ago.

This item in the BLS calculus continues to plunge, and many, including CNBC's Chief Economist, Steve Liesman, cite the aging baby-boomers retiring as the main culprit, though other economists disagree, and heartily so. The number usually thrown about is that 10,000 baby boomers are retiring every day, though, if that were true, there would be something on the order of 300,000 jobs available every month and the labor condition would be booming, but those numbers are not showing up in the NFP reports.

A few of the prominent factors contributing to the lower participation rate are: 1) the coming of Obamacare, which is prompting more and more employers to hire only part-time workers; 2) a reluctance by companies large and small to replace workers lost through attrition or layoffs due to uncertainty in the economy or outright slowdown; 3) the ease by which individuals can qualify for public relief programs such as unemployment insurance, welfare or disability and the generosity of those programs, and; 4) a thriving underground economy of self-employed or off-the-books workers who simply aren't part of the statistical sample. It's been long known that government statistics are wildly faulty and unreliable, and the labor stats simply don't account for the literally millions of Americans who are making ends meet by working around, though or otherwise outside the system, a system which sucks the lifeblood, via taxation and regulation, out of both employers and workers.

The government's statistics may be relied upon by Wall Street investors, but the logic and realism of their assumptions is faulty at best and downright improper at worst. Americans have always found means to an end, and, when the government - all all levels - exerts undue, stifling restrictions upon the citizenry, the people quietly move on without them. Beating back the government by hook or by crook is an American tradition and it will remain that way, so long as people in power feel the necessity to invade every aspect of a citizen's life.

Dow 14,922.50, -14.98 (0.10%)
NASDAQ 3,660.01, +1.23 (0.03%)
S&P 500 1,655.17, +0.09 (0.01%)
NYSE Composite 9,439.66, +19.31 (0.20%)
NASDAQ Volume 1,668,595,250
NYSE Volume 3,384,952,750
Combined NYSE & NASDAQ Advance - Decline: 3718-2834
Combined NYSE & NASDAQ New highs - New lows: 206-54
WTI crude oil: 110.53, +2.16
Gold: 1,386.50, +13.50
Silver: 23.89, +0.636

Saturday, September 15, 2012

It's Not Just Stocks; Americans Are Rising Again

If one were to look just the US stock markets, the assumption would likely be that all is well and good with the US economy.

The major averages are at multi-year highs, with the Dow less than 600 points from its all-time high (Oct. 9, 2007: 14,164.53 close) and the S&P 500 a mere 100 points away from its all-time closing high set on October 9, 2007, at 1565.15.

A peek under the hood, so to speak, would reveal a different reality, with unemployment above eight percent for nearly four years running, massive stimulus programs by the government and the Federal Reserve boosting stock prices but sparking inflation and leaving middle class America and small business seething through high gas prices, slack demand, virtually no job creation, a shrinking work force and record numbers of Americans receiving government assistance through food stamps, welfare and a variety of other programs.

The impression that all is apparently just fine is touted by the media to a largely unsuspecting public, though that aspect of life in America is changing. More and more people distrust government at all levels, actually understanding that the Federal Reserve is willfully destroying the value of the US dollar, engaging in all manner of underground economics, from backyard gardens to unreported side job incomes, leaving the "system" to fend for itself without public support.

Government, especially at the federal level, continues to parade about their so-called "expertise," knowing what's "good for the American people" while doing little to nothing to remedy the conditions which plague middle-to-low income families. The rapidity by which independent thinkers are withdrawing the consent to be governed is startling when one examines Americans up close.

While the economists and analysts look at largely massaged, incorrect and inconclusive numbers on jobs, spending, inflation, productivity and income, they entirely miss the now massive, unreported, burgeoning economics taking place in small towns and large cites across the expanse of the continent. Certainly, there are minions still without knowledge or understanding of the extent of the financial crisis - now nearly four years old and running - still willing to rely on government help, but a growing number of people have come to the realization that government today exists only to self-perpetuate and serve the needs of a greedy, cumbersome system of enormous public corporations and government regulations designed to stifle competition, crush creativity and retard personal growth.

Such people are increasingly taking matters into their own hands, purposely defaulting on fraudulent mortgage loans, making do with less, and living more off the land than having to depend on the corporate food chain of genetically-modified foods, products stuffed with hormones, sugars and high fructose corn syrup that are unhealthy but still promoted by government officials.

These people are eating better, more nutritious, healthier foods, avoiding government regulations in quiet protest and operating in a largely cash economy that will continue to grow and flourish because it is too big, too diverse and too pervasive for regulators and prosecutors to effectively control.

From the government's perspective, such actions by individuals and families in the private sector are viewed as counter-productive to their aim of the perfect welfare state. In the minds of the actual practitioners of this "new economy" it is a necessity of survival. They are finding like-minded individuals in their friends and neighbors, spreading the word to others who seek to escape the all-seeing eyes and ears of a tyrannical elite, and prospering while the government stumbles, bumbles and eventually will self-destruct.

When the invisible secondary economy becomes so large that it mirrors the "official "GDP," as occurred during the oppressive days of prohibition, radical change will certainly follow, as it did then. The people shall rise, not all as one, but in various pockets of defiance, from urban strongholds to rural outliers. For many, especially those which have not seen the light, chaos will prevail. For those who have been silently proactive in the management of their livelihoods and self-sufficiency, it shall be a time of prosperity and freedom.

America has been and will be a country based upon principles of personal liberty and economic freedom. If the government is ill-equipped to support these values or even to go so far as to attempt to deprive citizens of their rights under the constitution and other prevailing, fair, tested laws, then the people will withdraw their consent and forge a new era irrespective of government policy and procedure.

The process of reformation and recovery from a top-down, repressive, centrally-planned society and economy to one from which the nation was formed: individual, self-sustaining, resourceful and fiercely independent, will take years, even decades to come to fruition, but come it will, come it must.

American people of good conscience and knowledge have had nearly enough from a government that refuses to protect and promote the interests of its citizens. While a day of reckoning may never be realized, small steps forward by individuals and like-minded groups are already well underway and will continue until the jackals, thieves and miscreants who call themselves our "leaders" are swept away by a tidal wave of public discontent.

America - at least its spirit - will forever live in the hearts and minds of true patriots who will always choose to fight rather than to take flight.

Those who wish to limit freedoms and curtail the liberties which made the nation the greatest in the history of mankind will find their tenure short-lived and their efforts fruitless.

This post was inspired by a true American.

Dow 13,593.37, +53.51 (0.40%)
NASDAQ 3,183.95. +28.12 (0.89%)
S&P 500 1,465.77, +5.78 (0.40%)
NYSE Composite 8,458.88, +51.85 (0.62%)
NASDAQ Volume 2,028,686,500
NYSE Volume 5,067,050,000
Combined NYSE & NASDAQ Advance - Decline: 3749-1817
Combined NYSE & NASDAQ New highs - New lows: 749-31 (absurd)
WTI crude oil: 99.00, +3.78
Gold: 1,772.70, +31.50
Silver: 34.66, -0.12

Monday, March 15, 2010

Oil Lower, Stocks Mixed, Senator Dodd Confused

Markets continued their pattern of going nowhere in a hurry on Monday, but oil futures traders may have tipped their hands, sending the slippery stuff back below $80/barrel.

In Washington, meanwhile, Senator Dodd doodled with the financial reform bill, making the Fed the ultimate protector of consumers, a laughable situation. Remember, it was Dodd, along with his house counterpart Barney Frank, who oversaw the destruction of Freddie Mac and Fannie Mae, watched with gaping jaws as Goldman Sachs and Wall Street hijacked the nation's economy and now thinks anointing the Federal Reserve as the head of a consumer financial protection agency is a grand idea.

Actually, the politics of the situation speak more boldly than the white-haired Senator from Connecticut (many of his constituents are in the financial industry). Having the Fed as a consumer protector is akin to hiring Tiger Woods as a marriage counselor. It may appear good on the surface, but the reality is that only the banks will be protected since they're the ones to whom the Fed is tied. The Fed is not a government agency. It is a PRIVATE BANK. Dodd's bill suggests self-regulation again, the very concept that dynamited the underpinnings of the financial industry over the past ten years.

In essence, Dodd's bill is about as useful as a fire extinguisher in a forest fire. Consumers will be protected to the extent that they distrust the banks and financial companies with whom they deal. If Dodd and his congressional playmates were serious about financial reform, the very first thing they'd do is re-institute the usury laws they helped decimate in the 90s, but that's a pipe-dream in today's environment. Congress is merely a patsy for the banks and the Fed. Consumers are pigeons, to be taken and swindled at every opportunity, including at the teller window and the voting booth.

The legacy of this and the past 12-15 congresses will be one of patronage and passivity. Not a single piece of financial or regulatory legislation passed in the past 15 years has improved the lot of everyday Americans. Banks and Wall Street have flourished while Main Street and the middle class has floundered in a sea of red ink, debt and tiresome politics.

Generally speaking, anything passed by congress these days should be ignored, especially since they can't seem to find a copy of the constitution anywhere in the Capitol. Dodd's proposed bill, like the health care legislation, protects the people who pay for their election campaigns. In Dodd's case, the financial industry; in the matter of health care, the pharmaceutical companies and health insurers get all the benefit, just like they did with Bush's prescription drug bill.

As mentioned in a post over a year ago, we have entered the post-government era in America. Real progress is being made behind the scenes in the underground economy which doesn't pay taxes, doesn't follow local, state or federal mandates and deals largely in cash. It now comprises most small businesses, home businesses, illegal operations such as drug dealing, prostitution, gambling and work-for-hire operations. If government would step back and get the hell out of the way, the American engine of progress that is the able-bodied unemployed, underemployed and off-the-books employed could set sail on a new chapter in economic history.

Americans are so keen on getting government out of their lives, off of their backs and away from their employment that more and more people are simply playing the non-compliance game. The number of individuals not reporting income, cheating on their taxes and/or simply ignoring all of the paperwork and hassle involved in dealing with government regulations is swelling by vast numbers. It cannot be tracked, it cannot be traced and it cannot be stopped. Quietly, Americans have begun their own revolution, in a very stealthy, entrepreneurial and innovative manner.

Fed up with Washington's political bickering and squabbling which produces worthless legislation, government employees who are paid 50-100% more than private sector counterparts with benefits far in excess of what they could even imagine to afford, and lack of prosecution of bank thieves in pinstriped suits, small business Americans will and are striking back at the heart of the government's grand swindle. Without money in the form of tax receipts, government ceases to hold power over individuals. Without funds, their projects will run into more and more deficits, eventually resulting in wage and benefit cuts to the rank-and-file, or layoffs, which will engender strikes, walk-outs and a final breakdown of the entire government/industry/financial complex.

The movement is well underway. Groups like tea parties are only the beginning, the euphemistic tip of the iceberg. This revolution will not be televised. It is hardly even spoken of, much less broadcast, but it is growing daily as pent up disgust and hatred of institutionalized mediocrity seeks an outlet. Americans always have fended for themselves and joined with others of like minds, whether the enemy be Germans in submarines, terrorists or well-tailored officials. Washington and Wall Street will have only themselves to blame when the realization of lower tax receipts becomes clear and evident. They have overstepped their bounds by an order of degree and the American public has begun to lash back with a fury usually reserved for rapists and traitors, of which congress and Wall Street has in ample supply.

Let there be no doubt. The American public is willing and able to break laws and conventions in order to save democracy and this current struggle - largely a financial one - is no different than the labor movements of the 30s or the war protests of the 60s. By November, with rancor drowning out campaign rhetoric, the voice of the people will wail the loudest by either disposing of incumbents or eschewing the polls altogether, as the issue is not Republican or Democrat, but politics as usual, which doesn't work, hasn't worked and never will work.

The struggle continues.

Meanwhile, in the caverns of Wall Street, confusion reigns supreme. With two of the major indices up and two down, there's an obvious lack of direction, though, just in case anybody cares to notice, the Dow Jones Transports and Industrials have diverged, as has the Dow and the NASDAQ. The NASDAQ cannot lead other indices higher. Every instance in which the NASDAQ has exceeded a previous high and the Dow did not follow has produced a nearly-immediate sell-off in all indices. Worse, the Dow Transportation Index, which broke to new highs last week, was not followed by the Industrials, a classic non-confirmation which spells disaster for the now over-extended bear market rally.

Thus far, the markets have resisted corrections, first, in June of last year and most recently in February, never falling into the -10% area that would indicate true corrective activity. Instead, the few players remaining in the bowels of the markets have intervened, producing a rally that is neither believable nor sustainable. However, since most Americans are now cheating the government in order to keep food on the table and heat in the furnace, don't be surprised if corporations haven't devised equally devious manners to inflate profits, hide losses and artificially grow earnings. The Ponzi scheme has become the norm for finances in the USA.

Dow 10,642.15, +17.46 (0.16%)
NASDAQ 2,362.21, -5.45 (0.23%)
S&P 500 1,150.51, +0.52 (0.05%)
NYSE Composite 7,350.96, -11.89 (0.16%)

Giving credence to the falsity of the markets, advancers were beaten badly by decliners on Monday, with losers ahead, 3791-2689. That's a notable divergence and should set off alarm bells in brokerages. The long-anticipated selling spree is about to commence. New highs moderated down to 475, but new lows fell to a mere 32. Trading volume was dismal, as befits an overbought market that cannot climb to new heights because the underlying fundamentals simply aren't there.

NYSE Volume 4,680,055,500
NASDAQ Volume 1,909,806,375

In another sign that the gloves are off and it's every trader for him or herself, oil slid $1.44, to $79.80, abruptly ending the three-week rally that brought it all the way to $83. The price of oil is inexorably tied to economic conditions. Despite the best work of hedge funds and market interventionists, the price of oil will someday revert to following supply-demand dictates from the market. That day cannot come soon enough.

Gold gained $3.60, to $1,105.10. Silver was up 6 cents, to $17.08 per ounce.

On Tuesday, the FOMC releases their latest policy dictate. They will change nothing and the market will, in turn, not react. Stocks are already pricey and cash is king. Sooner or later, the Wall Street moguls will find out that much of the paper they're trading is pure nonsense.