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The Unemployment Lie - co-written by Dr. X, MD, & Juanita Rant, 07-16-09

We have two more weeks before the ObamaCare crap goes into affect. We can send emails to our Congresspersons to tell them how we feel. I will get the link that shows all my eFriends the email addy of the person for their district. We must try. Then we will know for sure, if they do the opposite (which they will), that they truly are tyrants and are not listening and need to be voted OUT. 59% of Americans feel the ObamaCare thing for businesses will cause loss of jobs, or cut salaries. So majority do NOT want it. I'm all about the majority. Those who voted for Obama should pay for this. Hey, I have an idea.....you get taxed by your party and your vote. If they voted for Obama, they get to pay for all the things he wants you to pay for....and those who didn't vote for him, don't. It should be the same for the opposite...when a Republican gets into office and what they want you to pay for. People would start learning real fast about how politicians work, and research their candidates then, wouldn't they? Then they would vote by being informed, rather than being opionated. Did people vote by looking back, or did they vote by looking forward? Unfortunately, many only vote by looking at the past. They forget the past is not who's running for office now. I'm probably not supposed to share this info I got off my paid subscription, but I'm sorry -- this kind of thing needs to be shared with the world! If you want to know which rich millionaire wrote this article below, then contact me. Check out this article about the current Obama Unemployment Lie. j.

"THE CURRENT ECONOMIC SITUATION

I'm not going to lie to you. Things are still grim. The government is incompetent and, in spite of promises and assurances from my Democratic friends, I doubt things will change soon.

There's just no way Obama's spending plans can do what business can't do — make business models that don't work, like GM or carbon credits, work. Every day, more and more companies announce layoffs. Even municipal governments are reporting shocking numbers. Some places like Detroit and Cleveland will soon see unemployment rise to more than 50%.

The government says unemployment is at 9.4%, but the truth isn't nearly that rosy... When Washington suits talk about unemployment, they usually cite a dataset from the Bureau of Labor Statistics (BLS) called the "U3." Without going into the bean-counting details, the U3 excludes all sorts of people who aren't drawing unemployment benefits or looking for full-time work.

The BLS also keeps a dataset called the "U6" that counts all those folks. As of June, U6 data puts unemployment at 16.8%.

The government likes the U3 series because it looks better... all the better to reassure voters... But it's a lie. The U6 includes everyone not working – even people who gave up looking for work but still want to work, people who are working part-time but still want full-time work, etc...

Still, some people claim employment figures are misleading because they lag a recovery. Fine. Let's look at a completely different set of numbers: traffic on America's biggest freight railroads. The freight rails carry a large percentage of the raw materials used in manufacturing – lumber, steel, chemicals, etc. – and they carry large volumes of finished goods, too (automakers are big users of rail service).

So freight rail traffic provides a nearly instantaneous view of demand for goods in North America. Well, U.S. carloads are down 24.6% from a year ago. June was the seventh month in a row that rail traffic declined by double-digits.

Other economists claim housing may be turning around. I don't buy it. The Obama administration is trying to stall the inevitable collapse of housing by forcing lenders to modify troubled loans.

Forcing a legitimate lender to take the hit on an individual's failure to be responsible is downright un-American. Worse, the facts, as Barron's notes this week, show 62%-80% of borrowers who get their mortgages modified default again within 10 months.

I have another measure to assess the state of the economy and the future of stocks. It's my "taxicab index," and right now it's pointing down in a big way.

Cabbies are barely able to cover the cost of a day of driving. For example, my cabbie in New York City told me the drivers at JFK are waiting two and a half hours for a fare. In bull markets, the time drops to 30-40 minutes. Even two blocks away from our offices at Baltimore's Pennsylvania train station, the cabs are lined up around the block. Last week, I counted 49 cabs in line at the station (heck, I didn't even know there were that many cabs IN Baltimore).

One thing is clear: There is no easy fix. Throwing good money after bad is the No. 1 rule to avoid in business. It won't work magically work for government, either. Not in a world of imploding debt, financially collapsing consumers, and job losses approaching Depression-era numbers. The intellectuals of D.C. must think we're stupid to believe there is. Remember this the next time you vote.

I implore you to avoid thinking of this moment as "the buying opportunity of a lifetime." It's not even close to one. My bet is most people saying those things are in their mid-30s (or younger) and haven't looked at the data. Many of them haven't even lived through a business cycle.

There are also those who claim you should stay fully invested at all times. Be careful. They often use short time periods that prove their case. Some of their "science" would be thrown out in a peer review. It's just marketing hype. (I advocate staying in stocks for the long haul, but you should never put your full portfolio in the market.)

Now here's the good news: This economic downturn will pass. And it might even serve a purpose. John Kenneth Galbraith, economist and author of the best book there is about the Depression (The Great Crash), used to say bear markets were good because they "expose what the auditors failed to find."

I'd like to think of the business cycle as a way to allocate capital to things that are working and take it away from things that are broken. I just hope the current politicos start thinking this way.

By the way, second-quarter earnings are starting to come out... I suspect it will be a mix of surprises with worsening projections — be careful. (Except, of course, for Goldman Sachs. It just announced $3.44 billion profits in the quarter. At this rate, each Goldman employee is on pace to receive $750,000 in bonuses at year-end. This is obscene - Goldman needs to hang a sign on its headquarters "YOUR TAX DOLLARS HARD AT WORK".)

P.S. I just rented two more American-made cars, a Chrysler and another GM — both were junk. These companies should have been out of business long ago."