Republicans on Welfare

Not only have the rich gotten richer, but they have also gotten attitude. To hear the Republicans talk, you would think that they were nothing but saintly “jobs creators”. But who actually feeds more at the federal trough? Republican voters or Democratic voters?

I have never applied for federal assistance, and won’t until it is time to withdraw my money from Al Gore’s fabled “lock box”, but I’m guessing that the forms do not have check-boxes for party affiliation. So, it is probably not possible to know, for example, how many Republican voters are receiving unemployment compensation – but millions of them undoubtedly are.

Another problem is the sheer size of the federal/state government complex, and the, shall we say, opacity, of its accounting. So, finding accurate statistics would be quite a challenge, far beyond the capabilities of a mere blogger. Put perhaps a large newspaper, or think-tank, could take up the project.

I would go department by department. For example, the Department of Agriculture will spend about $70 billion on food stamps this year. Maybe $30 billion of that goes to Republicans, and $40 billion to Democrats. But Ag also spends $20 billion on farm subsidies, the lion’s share of which probably goes to rich, red-state, Republican land-owners. So, it is entirely possible that the Department of Agriculture doles out more cash to Republican voters.

That was a horse race though. I think that once you got into the really big money, bank bailouts and war profiteering, you would see the Republicans take a commanding lead. Such payments don’t go to individuals of course, but as the Republicans have established, corporations are people too. For example, billions in what could certainly be classified as hand-outs should be credited to Dick Cheney, Halliburton, and the Republican side of the ledger, no?

Elliot Wave Refuted

On page 183 of the Elliot Wave Principle, Frost and Prechter write:

“To sum up our view, then, the market, for forecasting purposes, is the news.”

In other words, the trader need not follow any news outside of the market. You don’t need to know if the Tea Party will force the federal government to default on the national debt. You don’t need to know if S&P will downgrade US treasury bonds. You don’t need to know if Greece will default or not. You don’t need to know if Lehman Brothers will collapse. That’s just noise that is already baked into market movements.

But this assertion is easily disproved. The Federal Reserve Bank has been following a policy of “transparency” – bending over backward not to surprise the markets. Chairman Bernanke often just tells us what he will be doing well before the official announcement. And Fed actions are leaked to the news media beforehand. If you want to know what the Fed will almost certainly do, just read Jon Hilsenrath in the Wall Street Journal.

And yet, when the Fed makes its announcements, the markets make huge gyrations – even when the Fed does nothing. Here is an intra-day chart of the S&P 500 on August 9, 2011 when the Fed made its scheduled interest-rate policy announcement (click chart to enlarge):

Elliot wave refuted

Wavers assert that that massive 75-point swing would have happened anyway, and that I am just blaming it on the FOMC announcement. Right? The market does something, and then reporters scramble around looking for “news” they can use to explain the event.

Which is total BS.

The Fed causes those waves.

Note to wavers: deal with it.

This ridiculous concept is analogous to diet books that tell you: “Eat all you want and still lose weight!” They are just telling you what you want to hear. They know you are a fatty, and love food. Otherwise, why would you need a diet? So, they tell you that you can eat all you want because they know that, deep down, you don’t really want to stop eating. You just want somebody to tell you that it’s okay to “eat all you want” – preferably some fifty year-old guy with gray hair in a doctor outfit looking all authoritative.

The wavers know that you are lazy. They know that you don’t want to follow events in Greece, or read business news, or understand what credit-default swaps are. So, they tell you what you want to hear. That you can take a chart, any chart, draw a few lines on it with your crayon, and know the future.


Wavers tell you the exact opposite of reality. That trading easy. But they are not the only ones, of course. Everybody hawking “the ultimate theory” does the same thing. The guru game is a con. A successful guru has got to rope-in the suckers, and quickly sell them their book, newsletter, and seminar before the suckers lose all their money.

And they will.

Because only 1% of traders are consistently profitable. The rest are shark-bait, and the sharks have to keep on swimming, constantly roping in fresh suckers with absurd claims.

We Need MORE Regulations, not Fewer

American factories are clean, safe, efficient, high-tech, and world-class. And that’s a huge problem – for the capitalists that own them. You see, American CEOs resent the fact that regulations forced them to make their factories a model for the rest of the world. They gaze longingly at Third-World hell-holes and think:

“If only we could bring those low standards to the USA. If only we could pollute and maim workers while paying them $2 hour like in the good-old days. Then I wouldn’t have to spend so much time flying back and forth to those malaria-infested swamps where I am moving my production.”

So, the marching orders have been issued. Republican flunkies have fanned out across the nation agitating for “less regulation” and lower pay for the lowest rung of workers. But that is the exact opposite of what we should be doing.

When I say “we need more regulations”, I am using the global “we”, meaning that the USA should be forcing other nations to rise to our standards. For example, if Mexico wants to export General Electric washing machines to the USA, we should tell them: “No way, Jose. Not until you bring your minimum wage up to match ours.”

Get it? We level the playing field for domestic manufacturers while at the same time being a force for progress in Sweatshopistan.

And you know what? Jobs would flood back into the USA. Our Third World competitors like to think that they are smarter than us, and work harder than us, and are destined to surpass us. But that’s all BS. If forced to compete on a level playing field, they would experience a very rude awakening from their delusions of grandeur.

There’s a Sweatshop in Your Future – If You Are Lucky – Part 1

The campaign to transform America into an Asian-style sweatshop economy is now out in the open. So far, I have seen three Republicans advocating the revocation of the minimum wage: Michelle Bachmann, Ann Coulter, and Ron Paul.

But instead of debating the alleged merits, why don’t we just look at the time that it was tried on US soil. After all, the experiment ended only two years ago.

What’s that you say? You don’t recall any such experiment? Well, don’t feel bad. I’m sure that Bachmann, Coulter, and Paul are equally uninformed because there is a very thorough media blackout on the experiment. I consume a lot of news, and can’t recall a single instance of it even being mentioned in the media during the last three years.

The multinationals want it keep quiet, and consequently, all we hear are crickets.

Nevertheless, it did indeed happen, and it was an appalling failure.

Saipan is a Pacific Ocean island near Guam. When it became an American commonwealth in 1975, it was made exempt from the federal minimum-wage law, as well as immigration laws.

Saipan was quickly blanketed with sweatshops producing apparel for major brands like The Gap, Ralph Lauren, Liz Claiborne, Ann Taylor, Levi Strauss, Walmart, etc.

Asian women were brought in, housed in rat-and-roach infested barracks and forced to work under appalling conditions. Chinese women have reported that it was worse than conditions in China.

The lucky girls just had to sew designer clothes, sometimes for 40 hours straight. The unlucky ones were forced into prostitution – even underage girls.

The multinationals loved Saipan because it was officially part of the USA and they could put “Made in USA” labels on their products to fool conscientious consumers.

If you Google Saipan, you can find video of the barracks, and plenty of harrowing stories. And as you do so, keep in mind that it was no accident. If you want to know the multinational’s true vision for America, look no further.

What if the Republicans succeed in eliminating the minimum-wage? What would be next on their agenda? The child-labor laws, safety laws, pollution laws, and the 13th Amendment to the Constitution – you know, the one that outlaws slavery and involuntary servitude.

The multinationals violate all those laws whenever they can get away with it in the Third World. They are only restrained by the need to balance public relations.

Maybe you think that I am exaggerating by suggesting that slavery could be brought back to the USA. But that’s thinking inside the box. I guarantee you that the multinationals have no such limitations to their dreams. We have seen what they did on Saipan, and while they may not have violated the letter of the 13th Amendment, they have certainly violated its spirit.

But we don’t need any more experiments. Saipan shows us exactly what a libertarian utopia looks like. And we already have very successful experiments from our history.

In 1914, Henry Ford did the exact opposite of what the Three Stooges (Bachmann, Coulter, and Paul) are suggesting: he doubled the wages of his workers. Ford’s vision helped to create the once-mighty American middle class.

Whose vision should we be following?

Also, in 1914, we had a 17.6% tariff on imported goods.

But American history is a moot point. In fact, America itself is moot. We live under a globalist empire, and the marching orders have been handed down. Expect many more stooges to come forth advocating a Saipan-like future for the USA. And they will probably win. Corporate profits will soar far beyond what they are now as vast sums are made from squeezing the life out of the middle class. Trillions have already been made from global labor arbitrage as millions of jobs and thousands of factories have been outsourced and offshored.

But that has only put a modest dent into the middle class; just a small taste of what is possible, and the multinationals hunger for more. They own the Congress and White House, and libertarians like Ron Paul provided ideological cover.

There is a sweatshop in your future.

You heard it here first.

Food Stamp Usage Finally Declines

The number of people receiving food-stamps has declined for the first time in over three years. See the food-stamps chart.

As you can see on the chart, there is a spike in May. That was due to the tornadoes in Alabama. In total, the USDA says that they added 1.1 million people to the food-stamps program due to natural disasters in several states. So, was June’s decline just people coming off the emergency programs? Maybe, but I think there would have been a decline anyway.

The peak number reported in May was 45,410,683. If we subtract 1.1 million from that, we get 44,310,683. And that is lower than the March total of 44,587,275 – before the emergency programs began. The USDA did not break down the 1.1 million number by month, so we can’t know for sure, but I think it’s safe to say that the rolls would have declined from March if the food-stamp program had not been used for disaster relief.

Now, you might be asking yourself:

“Why didn’t I read about this on “Zero Hedge”, or Lee Adler’s “Wall Street Examiner”. They report on the food-stamp data, so what happened?”

I’m glad you asked me that. Look at the word “report” in your question. There’s your trouble right there. You see, un-objective perma-bears only report bad news.

Note: The USDA released this data last week, but I knew there was no rush. There was no way the likes of “Zero Hedge” or the “Wall Street Examiner” were going to scoop me. I knew they would ignore it, so I just took my time. The bear camp had four solid days to maintain a facade of objectivity, but they declined.

Companies Add Jobs for 18th Straight Month – Investors Jump Out Windows

The horror! Another month of the private sector adding jobs (click chart to enlarge):

I have taken the liberty of adding back in the 45,000 jobs that were subtracted from the August total due to the Verizon strike. Those jobs are still there after all. But even without that adjustment, it would still have been 18 months in a row.

So why did the stock market dive 2.5%? Investors are worried that the economy is stalling and becoming vulnerable to recession. And indeed, if we look at the second derivative of the first chart, we see that jobs growth has stalled. And the annual growth rate has ticked down for the first time since the bottom:

However, if you look back at the top of the last cycle, you can see that the growth-rate peaked in early 2006. And the stock market didn’t top out until October 2007 – a year-and-a-half later. So, while the slowing of the growth-rate is concerning, it is not necessarily the kiss of death.

And there is a huge difference between now and the last peak: the Fed had taken rates up to 5% and held them there until the housing bubble popped – and the rest of the economy along with it. Back then, the Fed was deliberately squeezing the economy, and that is the very best sign of a coming recession. Look at this Fed Funds chart:

Is it a coincidence that recessions are triggered by rising rates? I don’t think so.

And is the Fed squeezing the economy now? Not hardly, right? Is it possible for a recession to begin with rates at 0%? I suppose so, but it’s not something that has happened in the last 60 years.

Now, if Bernanke started raising rates while complaining about a gold bubble, then the odds of a recession would skyrocket. The Fed also likes to have a recession when workers get too uppity. Got to fight that “wage inflation”, right? Not exactly a problem at the moment…

And of course, there is a presidential election coming. Unless the powers-that-be give Obama the thumbs down, you can bet that the entire federal apparatus will be in high gear trying to keep the economy afloat. Hell, some of those CIA black helicopters might even fly over here and drop some bales of cash on us when they are done in Libya.

A non-hysterical scenario would be a muddle-through economy over the next year, accompanied by a range-bound stock market. Time will tell, but as I’m sure you know, swing traders can make huge profits in such a market. I think that’s a more likely scenario for as long as the Fed remains friendly. If the Fed turns hostile, Jean-Claude Trichet style, then I can’t be responsible for what happens. Of course, the ECB has already backpedaled, so the world’s two most important central banks are now dovish. Maybe it’s too late, and Trichet has doomed the world to recession. What do you think?

Withholding Tax Collections Plunge!!!

Here is a chart showing the 21-day moving-average of Federal withholding-tax collections, compliments of the distinguished gentlemen over at

As you can see, the average has dropped into the $5.5 billion range – the lowest level in a year!


(click chart to enlarge):

Ha, ha! Gotcha! Hope you liked my “Tyler Durden” impression! Just a little “NFP Eve” jobs humor!

If you know what’s wrong with the interpretation above, you get a gold star. Tell your mom that I said it was OK.

Of course, tax revenues always drop this time of year. The next chart is the same as above, but from one year ago:

Almost identical, right? However, the upper chart has not been adjusted for this year’s big social-security tax cut. So, it would be substantially higher if it were not for that. And that makes sense because the jobs that the economy has added over the past year are still there. Maybe we are tipping over into recession, but there is no sign of that yet in the withholding-tax data.

Do you think that it’s just a coincidence that September is the worst month for the stock market? Or could this seasonal slow-down in economic activity influence the market?

Note: It is possible to make such moving-average charts of the withholding-tax data because it is reported every day, unlike other economic data that is only reported weekly, monthly, or quarterly. The charts above, and more, are updated every day at