Another shock from the Labor Department on top of last month’s disaster delivers a severe and final body shot to any hope for recovery. If last month’s jobs data catastrophe didn’t convince those betting on a U.S. recovery that they’re blowin’ Dixie, not much will.
The headline jobs number came in at more than 18,000, with a consensus expectation of 105,000 from the usual economists. Looking beyond the headline, however, the bogus Birth-Death adjustment of more than 131,000 only serves as an insult to the intelligence of anyone tracking these data. It’s just another Orwellian thing.
So, after backing out the phantom job creation from the Birth-Death model, the June loss of more than 100,000 jobs can be added to May’s roughly 100,000 job loss. That’s a contraction of more than 200,000 for a U.S. economy that needs to show job growth of at least 125,000 per month to break even, after considering population growth.
With the U.S. economy clearly sinking into deeper recession (some say a depression), it appears the social unrest in Europe is coming to a neighborhood near you. No help from Washington this time. If federal spending increases to mitigate the plunge, the already ridiculous budget deficit blows up into an Argentina-like collapse. If taxes are raised, the economy moves into rapid implosion, lowering tax receipts even further and accelerating the debt to GDP ratio beyond any hope of a turnaround.
The U.S. has entered a Kondratiev Winter, a time during the debt super cycle that Russian (Soviet Union) economist Nikolai Kondratiev (1892-1938) warned befalls all economies reliant on ever increasing debt for economic growth. Kondratiev proposed the theory that Western capitalism moves through a 60-year debt-generated economic cycles of boom to bust. The Spring of the present super cycle began following the end of WWII in 1945.
It’s a Minsky Moment—a phrase used to reference Hyman Minsky’s (1919-1996) work on the relationship between debt and economic cycles—called the financial instability hypothesis. The Soviet Union-born Minsky, like Kondratiev before him, suggested that the end of the debt super cycle cannot be averted, but instead ultimately leads to one of two alternatives: an outright default, or default through currency debasement, a la QE1 and QE2.
Yet, another Soviet Union-born (Poland), Zbigniew Brzezinski, told MSNBS on Thursday he expects the civil unrest in Europe will come to America as a result of of a U.S. economy no longer able to service its debt.
The former National Security Advisor under President Jimmy Carter predicted “really serious international turmoil” as a result of the United States, Europe and Japan simultaneously drowning in excessive debt. In the past, slowdowns in any one region were made up by at least one of the others. Today, all three are mired in insurmountable debt burdens, says Brzezinski.
The three regions, comprising 55% of the world’s GDP, yet, represent only 10% of the world’s population, are on their own. Asking the rest of the world—which, when calculated on a per capita purchasing power parity basis equates to one-eleventh of his Western counterpart’s PPP—to bail out the West isn’t a solution, even if it was mathematically feasible. Even China, with its nearly $3 trillion, cannot handle the bill.
Therefore, Americans are about to experience the same pain as the Greeks.
“I don’t want to be a prophet of doom — and I don’t think we are approaching doom — but I think we’re going to slide into intensified social conflicts, social hostility, some forms of radicalism, there is just going to be a sense that this is not a just society,” Brzezinski said, adding that a decimated lower middle class is most likely going to be the catalyst for Greece-like civil unrest.
Read more: http://www.beaconequity.com/shock-jobs-report-brzezinski-warns-of-collapse-u-s-civil-unrest%e2%80%94got-gold-2011-07-08/#ixzz1Rj1nyQ00