GOP lie machine stays on target

Now it's Rudy Giuliani: "We Had No Domestic Attacks Under Bush; We've Had One Under Obama." (Please ignore the September 11th attacks, the Anthrax mailings, the George Tiller assassination, the "shoe bomber," and so on.) According to the Huffington Post, Mr. Giuliani had, the previous day, tried to assert that the shoe bomber attempted had taken place before 9/11. And none of it, apparently, during Mr. Bush's presidency; the "most tragic attack on [American] soil in our nation's history" was, as previously noted, "inherited" by the Bush administration.

Three times is enemy action, guys.

The lie was, of course, left unchallenged during the interview. I wonder how many people have now bought into that lie. Also:

...the Associated Press did a long write-up of Giuliani's Obama criticisms but omitted the startling mistake. George Stephanopoulos, who conducted the ABC interview, included the quote in a blog post but did not question it.

Jobs

Okay, so the December US jobs report is out, and it's much worse than expected, with 85,000 jobs lost counting seasonal adjustment. (Canada lost jobs as well, similarly expecting a gain, but the situation wasn't as bad. Thanks to cow for the link.) Most people were expecting a net gain. Note that to keep up with population growth, you need to have about +100,000/month to tread water w.r.t. the headline unemployment rate.

Why did the unemployment headline number (U3) stay at 10.0%? Because a lot of people left the workforce entirely, and it ended up about a wash. Technically the U3 got very slightly worse, but it still rounds to 10.0%. From the BLS report:

The civilian labor force participation rate fell to 64.6 percent in December. The employment-population ratio declined to 58.2 percent.

The U6 report - total un- and under-employment, including discouraged workers - ticked up 0.1 to 17.3%, seasonally adjusted; the non-adjusted number jumped 0.7 to 17.1%.

The December report of 85,000 jobs lost includes 59,000 non-seasonally-adjusted BLS birth/death model jobs added. For those coming in late, the Bureau of Labour Statistics's birth/death model attempts to estimate jobs gained and lost through to business startup and failure. It is (or at least, can be) unique to every month, so month-to-month comparisons are essentially impossible. It has only gone negative once throughout this entire recession, and it is a sham.

Looking back to last month, November was revised up from a small jobs loss to a small jobs gain (+1000, seasonally adjusted). However, as you'll recall, the completely broken "birth/death model" added 30,000 jobs to the non-adjusted tally that month. No matter what adjustments the BLS did for seasonality, take that back out, and November's still going to be a negative number. (Here's Mish's monthly roundup on the numbers, with all his convenient tables.)

And if you think it's just cranky people like me and Mish harping in birth/death, it's not; I missed this back in October(!), but the BLS has admitted the model is completely broken, and estimated at that time that it had overestimated job growth in this recession by 824,000 as of March 2009. That's more than all the jobs added by the birth/death model throughout January through October 2009. It's all going to be taken back out in the January numbers, which come out next month. Plus all the months after that have been positive as well; assume those are generally negative as well.

So that's going to be quite the crater. One might say it'll leave a mark. Mish has an assortment of commentary here. This won't affect the headline rate, though; it's a different survey, and there are legitimate reasons for that. But it will affected the jobs-lost numbers.

More frustrating is that those without jobs continue not to find new ones, in large numbers. The only reason there isn't rioting in the streets from joblessness, frankly, is the Extended Benefits and Emergency Unemployment Compensation benefit extensions. Seriously, here's the graph showing "continuing claims" - standard benefits. Note that "continuing claims" have fallen. (Also note that graph isn't zero based so it hasn't fallen as much as it looks like it has.) Looks good, right? Well, add that to this chart of Extended Claims benefits, filling in most of the gap until the last few weeks. But now that's falling - so that's good, right? Not when you see that the Emergency Claims rate has spiked to fill in that gap, as well. (All charts courtesy Chris Puplava at Financial Sense, via Mish Shedlock, thanks to both.)

And all this helps explain why December withheld tax receipts fell yet again, rather than rising, as expected, and why state tax revenue through September 2009 dropped the most since 1963.

November's job report genuinely wasn't too bad. December's was not attractive at all. January's is going to be a mess due to BLS revisions, so it's going to be fun times making heads or tails out of that.

Also, a heads-up...

The Federal Reserve has warned banks "to guard against possible losses from an end to low interest rates." That's a "HEADS UP, GUYS, WE GOT NO CHOICE." I rather expected something like this after my credit union - a good, conservative, and sound credit union - sent out notices to everyone with Visa cards last week saying, 'guess what! You're on floating rate now!' It's engineered so that it can only go up from now, of course. Amusingly, my current rate actually dropped very slightly - I have very good credit - but that won't last. Accordingly, here's my action plan:

• Reject the change in terms, terminating that card but allowing me to continue paying off the old balance at the old rate;
• Get a new card under the new terms from the same credit union to have for new charges paid off 100% every month no matter what;
• Get a new Amtrak card to churn like crazy for travel points. Yay, free trains!

But I digress. This is coming; the banks have been warned; now you have been, too. Karl at Market Ticker is telling everyone to brace for impact. So's Bill Gross at PIMCO, for markets in the first half of the year, and everyone else in the second half.

In related news:

PIMCO is moving out of US and UK bonds and into German.

Iceland's president vetoed a bill that would've required Icelandic citizens to cover Icelandic bank losses to foreign depositors. It worked out to around US$41,000 per family, and there were significant protests. (Polling shows 70% of the population opposed the bill.) The UK is making threatening noises at Icelandic voters to pass the goddamn thing in a referendum which will apparently happen following the veto.

Rumour on the street says that a second stimulus package is going to be coming down the road in the US, and possibly soon. T-bills rates are all over the place; dollar's a little lower, but not enough to care; oil's slightly up. Major oil producers are shuttering refineries to "align" supply and demand; that'll translate into higher retail prices in a couple of months.

Please enjoy looking up the Kondratiev Wave model in economics.