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re: Jobs Numbers
Posted on 6/2/23 at 10:42 am to Big Scrub TX
Posted on 6/2/23 at 10:42 am to Big Scrub TX
Consolidating responses before I get confused as to which post I am replying to. 
That's just it, I haven't been expecting it thus I consider my outlook to be realistic. The bigger issue is that DC seems now to consider keeping it near historic highs (instead of cutting it) as a "win" somehow.
It's going to depend on when we default.
The US federal government is constantly taking in revenues, the only reason we should default at this time is simply because the federal government refuses to stop spending so much each month for at least the next month or three. Were they to cut back on current spending, Yellen would be back to talking about "transitory inflation" instead of this debt-doom date (which she's already had to push back).
If the default happens once we get to the point where the highest single cost the federal government has is just servicing the debt, Japan will default shortly thereafter (if they still own as much US debt at that time as they do now, it wouldn't surprise me to see countries starting to shed US debt as the percentage of revenues needed just to service the debt grows).
quote:quote:
The federal government continuing to deficit spend like MMT is a viable monetary philosophy.
At which point were you expecting deficit spending to end? I'd argue there is no new information here.
That's just it, I haven't been expecting it thus I consider my outlook to be realistic. The bigger issue is that DC seems now to consider keeping it near historic highs (instead of cutting it) as a "win" somehow.
quote:quote:
At that point, a default is inevitable.
Maybe. Depends on your time scale. What's your prediction of when Japan will default?
It's going to depend on when we default.
The US federal government is constantly taking in revenues, the only reason we should default at this time is simply because the federal government refuses to stop spending so much each month for at least the next month or three. Were they to cut back on current spending, Yellen would be back to talking about "transitory inflation" instead of this debt-doom date (which she's already had to push back).
If the default happens once we get to the point where the highest single cost the federal government has is just servicing the debt, Japan will default shortly thereafter (if they still own as much US debt at that time as they do now, it wouldn't surprise me to see countries starting to shed US debt as the percentage of revenues needed just to service the debt grows).
This post was edited on 6/2/23 at 10:45 am
2
Posted on 6/2/23 at 10:55 am to Bard
Bard you seem to be the last bear still posting recently. The others( HUSS,Bama etc...) only come out on the big down days. I like that at least you bring the graphs and the stats to back what your saying. You maybe right evently but i hope you at least bought a few good company's back in Oct 2022 for some gains.
Posted on 6/2/23 at 11:02 am to Big Scrub TX
Most of us are pessimists especially when our guy isn’t in the WH.
The sky is always falling or about to.
The sky is always falling or about to.
Posted on 6/2/23 at 11:06 am to Bard
quote:What? Japan has long ago blasted through the threshold you have laid out as terminal. Why haven't they defaulted yet?
If the default happens once we get to the point where the highest single cost the federal government has is just servicing the debt, Japan will default shortly thereafter (if they still own as much US debt at that time as they do now, it wouldn't surprise me to see countries starting to shed US debt as the percentage of revenues needed just to service the debt grows).
Posted on 6/2/23 at 11:06 am to TejasHorn
quote:Yep. I would add to that, many people HOPE for the sky to fall when their guy isn't in office.
Most of us are pessimists especially when our guy isn’t in the WH.
The sky is always falling or about to.
Posted on 6/2/23 at 11:12 am to FLObserver
quote:
You maybe right evently but i hope you at least bought a few good company's back in Oct 2022 for some gains.
I sold some dogs and bought DOLE.
It's moderated my FRB loss 
quote:
Bard you seem to be the last bear still posting recently. The others( HUSS,Bama etc...) only come out on the big down days. I like that at least you bring the graphs and the stats to back what your saying.
Thanks. I don't see myself as a perma-bear nor perma-bull, just someone that looks at the data and makes a determination from there (I follow the economy far more than I do the market). Right now, that makes me bearish (see: the inverted yield curve, for example).
Posted on 6/2/23 at 11:15 am to Big Scrub TX
quote:
What? Japan has long ago blasted through the threshold you have laid out as terminal. Why haven't they defaulted yet?
I don't live in Japan, I don't follow what they're doing much beyond how much of our debt they own and knowing they have debt problems of their own.
Posted on 6/2/23 at 12:03 pm to Big Scrub TX
quote:
I'm not sure what you want me to tell you. Employment is still strong and we have positive (real) growth.
I'm asking the same question Bard is because the numbers reported seem to contradict each other.
Nonfarm payrolls in May increased by 339,000 (More people employed)
The unemployment rate rose to 3.7% in May against the estimate for 3.5%. May’s jobless rate was the highest since October 2022. (More people unemployed but looking for work)
Even though the labor force participation rate was unchanged. (Same percentage of population working/looking for work)
How can all 3 of those things be true at the same time?
If you've got more people working and more people looking for work, how can the LFPR remain the same?
I'm not arguing to make a point here, I am legit asking if I am missing something in how I'm looking at the report.
I suspect that this may have something to do with it:
"Despite the big jobs gain, the unemployment rate increased due in large part to a sharp decline of 369,000 in self-employment."
Posted on 6/2/23 at 12:53 pm to Bard
quote:What they're doing is running a MASSIVE debt that makes the US look like child's play. It's like 225%+ of their GDP and debt service (despite the preposterously low interest rates there) is ~25% of outlays.
I don't live in Japan, I don't follow what they're doing much beyond how much of our debt they own and knowing they have debt problems of their own.
By your casual prescriptions, they should have defaulted long ago. Yet, to me, I'd be surprised if they defaulted in the next 100 years.
It's going to be a long, painful road for you if your are making investment bets predicated on the US defaulting.
Posted on 6/2/23 at 12:55 pm to Lightning
quote:It's a good question to ask and you may or may not have answered your own question. My primary observation is that we don't have great evidence of an imminent cataclysm. But if one enters the discussion assuming so, then every number is a conspiracy.
How can all 3 of those things be true at the same time?
If you've got more people working and more people looking for work, how can the LFPR remain the same?
I'm not arguing to make a point here, I am legit asking if I am missing something in how I'm looking at the report.
I suspect that this may have something to do with it:
"Despite the big jobs gain, the unemployment rate increased due in large part to a sharp decline of 369,000 in self-employment."
Posted on 6/2/23 at 2:18 pm to Big Scrub TX
Posted on 6/2/23 at 7:18 pm to Big Scrub TX
quote:
What they're doing is running a MASSIVE debt that makes the US look like child's play. It's like 225%+ of their GDP and debt service (despite the preposterously low interest rates there) is ~25% of outlays.
By your casual prescriptions, they should have defaulted long ago. Yet, to me, I'd be surprised if they defaulted in the next 100 years.
So I've done a little reading up on Japanese debt and one aspect of how they're doing this is pretty much legalized money laundering (similar to what Jindal did with the SAVE Act to "balance" the budget years ago).
Almost ninety percent of their debt comes from bonds. Close to half of those bonds are owned by the Bank of Japan. The Bank of Japan is part of the Japanese government (and as such they don't pay interest on it).
Japan's debt is around $9.5T (USD). Of that, $8.3T is bonds. Of that $8.3T, around $4.4T is owned by the Bank of Japan. So nearly 50% of Japan's debt is actuarial bullshite because it's owned by itself. Factoring that out puts Japan's debt to GDP at around our own.
Even though Japan is seeing increasing inflation, they've actually paid down on their debt over the last year or so. That helps.
In other words, comparing their debt to ours is a bit of apples vs. oranges.
Posted on 6/3/23 at 9:21 am to Bard
quote:Interesting. That prompted me to do the same exercise for the US. Looks like about $7T of ours is held in a similar fashion. Looks like I just reduced our net debt by 23% for you in one fell swoop.
So I've done a little reading up on Japanese debt and one aspect of how they're doing this is pretty much legalized money laundering (similar to what Jindal did with the SAVE Act to "balance" the budget years ago).
Almost ninety percent of their debt comes from bonds. Close to half of those bonds are owned by the Bank of Japan. The Bank of Japan is part of the Japanese government (and as such they don't pay interest on it).
Japan's debt is around $9.5T (USD). Of that, $8.3T is bonds. Of that $8.3T, around $4.4T is owned by the Bank of Japan. So nearly 50% of Japan's debt is actuarial bullshite because it's owned by itself. Factoring that out puts Japan's debt to GDP at around our own.
ETA: And on top of that the Fed holds $6B. So $13T out of $31T is either intra-governmental or the Fed.
This post was edited on 6/3/23 at 9:25 am
Posted on 6/3/23 at 9:50 am to Bard
quote:I'm not sure this is right. And still, even if we allow for the BoJ effect you mentioned, their debt service to budget ratio is still at least twice as big as the US.
Even though Japan is seeing increasing inflation, they've actually paid down on their debt over the last year or so.
In any event, they are a major net food and energy importer and their population situation is laughably bad. Their fundamentals are worse than the US in almost every fashion. Still, not a single serious observer is expecting a default anytime soon. My point on all of this isn't that it's some sort of commendable setup for either country. Rather, it's just not the ticking time bomb some seem to want it to be - or, if it is a ticking time bomb, the fuse is so long as to make it irrelevant.
Posted on 6/3/23 at 10:40 am to Big Scrub TX
quote:
Interesting. That prompted me to do the same exercise for the US. Looks like about $7T of ours is held in a similar fashion. Looks like I just reduced our net debt by 23% for you in one fell swoop.
ETA: And on top of that the Fed holds $6B. So $13T out of $31T is either intra-governmental or the Fed.
The difference is that the federal government pays the interest on what it owes to the Fed (ie: the US federal government has to service all of it's debt, not just ~half), the Japanese government does not pay interest on what it owes to the BoJ. To make those more similar we would either see our federal government not paying ~47% of interest owed (which would make our annual servicing around $291B, which I don't think we've seen it that low since before the turn of the century, but the Treasury site has changed the way they display all that so don't quote me) or the Japanese government paying almost double what it's been paying just to service its debt.
Were we needing to pay only $291B annually to service our debt, we could pay it down (at least theoretically, Congress being Congress makes me doubt that would actually happen).
Posted on 6/3/23 at 10:50 am to Bard
quote:Well, in your own words - something doesn't add up. Even if we cut Japan's service number in half, their debt-service-to-budget ratio is still way higher than here.
he difference is that the federal government pays the interest on what it owes to the Fed (ie: the US federal government has to service all of it's debt, not just ~half), the Japanese government does not pay interest on what it owes to the BoJ. To make those more similar we would either see our federal government not paying ~47% of interest owed (which would make our annual servicing around $291B, which I don't think we've seen it that low since before the turn of the century, but the Treasury site has changed the way they display all that so don't quote me) or the Japanese government paying almost double what it's been paying just to service its debt.
quote:
Were we needing to pay only $291B annually to service our debt, we could pay it down (at least theoretically, Congress being Congress makes me doubt that would actually happen).
Yeah, good luck. When was the last year we didn't run a big deficit?
Posted on 6/3/23 at 11:05 am to ynlvr
RE: Jobs Numbers
I think it is more than a little unsafe to accept the survey data being used as reliable.
There are better ways to collect more accurate data already available and what they suggest about jobs data is fundamentally different.
Here's one I consider fairly reliable until they start hiding it:
federal government current tax receipts
Shrink the timeline to 1 year or five years.
Notice s very substantial drop in revenue. There has not been a drop in attempted taxation. Revenue is down because people are earning less income.
Then review the list of companies announcing layoffs over the last 12 months. Even if people are getting more jobs (which I doubt) they are getting lower paying jobs and/or working multiple jobs.
The tax revenues are down over 200 billion between the third quarter of 2022 and first quarter 2023.
I think it is more than a little unsafe to accept the survey data being used as reliable.
There are better ways to collect more accurate data already available and what they suggest about jobs data is fundamentally different.
Here's one I consider fairly reliable until they start hiding it:
federal government current tax receipts
Shrink the timeline to 1 year or five years.
Notice s very substantial drop in revenue. There has not been a drop in attempted taxation. Revenue is down because people are earning less income.
Then review the list of companies announcing layoffs over the last 12 months. Even if people are getting more jobs (which I doubt) they are getting lower paying jobs and/or working multiple jobs.
The tax revenues are down over 200 billion between the third quarter of 2022 and first quarter 2023.
Posted on 6/3/23 at 11:08 am to Big Scrub TX
quote:
In any event, they are a major net food and energy importer and their population situation is laughably bad.
Agreed. That's what happens when you are an island nation with a huge population though.
The US is the 2nd biggest importer of Japanese goods and the country from which Japan imports the 2nd most from. Japan also owns about $1.1T of US debt (eclipsing China's ~$859B). When the US defaults (because I don't see a way we don't), countries holding a large amount of US debt are going to hurt as are countries which rely on the US for trade. Japan is heavily vested in all three of those aspects, thus when the US defaults, Japan's economy will likely plummet not long after.
Economically, when the US sneezes the rest of the world catches a cold.
For Japan, I imagine that would be even more frightening as it relies on the US for defense against the incrementalism of Chinese expansion as well as attacks from NK (SK is also in that same boat when it comes to relying on our military).
Posted on 6/3/23 at 12:01 pm to Bard
quote:Can you at least try to put a time estimate on this? Do you honestly think it'll happen in the next 40 years?
When the US defaults (because I don't see a way we don't)
Posted on 6/3/23 at 12:11 pm to Big Scrub TX
quote:
Exactly.
FY2007 (deficit was $160B). While the wars in Afghanistan and Iraq were big costs, it wasn't until the last year of Bush's 2nd term (2008) when we saw deficits rise above -and then stay above- $400B. Now we're at a point where we haven't seen a deficit below $600B since FY2015 orrrrrr... where deficits haven't been below $1T since FY2019, and is not projected to ever go below that mark.
Even when adjusting for inflation we still had manageable deficits prior to 2008. From that point on it's slowly been building into an avalanche situation. We're now at the point where we have only $1T+ deficits estimated for the foreseeable future.
That's another part of the greater context I see when looking at incongruities on job numbers, unemployment, etc. We've already seen how the government has changed reporting on CPI in the past and that some of that (value-added readjustments and OER, for examples) has caused Inflation to skew lower in reporting. Trying to delay/downplay/ignore economic troubles by obfuscating reporting (which then creates environments where what should be similarly-trending numbers, becomes numbers telling different stories) falls in line with the same mindset which phrases the somewhat shrinking the growth of deficit spending as "cutting spending".
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