Mish's Global Economic Trend Analysis

The Dick Cheney-Syria Oil Connection
Change of Heart: The Case for Sending Personnel to Syria; Totally-Go-It-Alone Ironies
"Grand Coalition" Led by Merkel, Not Going to Happen; Expect a Shocker in Germany Election
Establishment Survey: +169K Jobs, June and July Revised Lower; Household Survey: Employment -115,000, Not in Labor Force +516,000; BLS in Wonderland

Posted: 06 Sep 2013 06:15 PM PDT

It appears there may be some energy sources in Syria that I was unaware of previously. They are in the Golan Heights area of Syria, now occupied by Israel. Dick Cheney is in the picture.

Please consider Cheney-Linked Company to Drill in Occupied Golan Heights.

The Israeli government awarded a local subsidiary of U.S.-based Genie Energy the rights to explore for oil and natural gas in about 150 square miles of the southern section of the Golan Heights.

U.N. Secretary-General Ban Ki-moon said keeping Blue Helmets stationed in the area was essential to peace given the potential for conflict spilling out of the Syrian civil war. Genie Energy said there may be a significant amount of oil and natural gas in the license area. When Israel set its sights on offshore natural gas, Hezbollah warned that Israel shouldn't encroach on Lebanese territory. If recent concerns about Hezbollah's influence are any indication, the Shiite resistance movement may focus its guns onshore amid expanding Israeli energy interests. With former U.S. Vice President Dick Cheney serving as an adviser to Genie, however, the implications may go beyond immediate worries over Hezbollah.

Genie Energy said there may be "significant quantities" of natural resources in the region. The license area encompasses about 150 square miles of the southern portion of the Golan Heights, considered territory occupied by the Israeli military.

"Genie Energy intends to conduct an exploration program to further investigate the size and quality of the resource in the new license area," the company explained in a statement.

Dick Cheney is serving as an adviser to Genie as it plans work in an area encompassing about 30 percent of the Golan Heights.

Also consider Separating Politics and War From Oil and the Economy

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Change of Heart: The Case for Sending Personnel to Syria; Totally-Go-It-Alone Ironies

Posted: 06 Sep 2013 11:49 AM PDT

I have had a change of heart. The US should send personnel to Syria. Notice I said "personnel", not combat troops or military equipment.

I had this change of heart after reading The Onion article Poll: Majority Of Americans Approve Of Sending Congress To Syria.

As President Obama continues to push for a plan of limited military intervention in Syria, a new poll of Americans has found that though the nation remains wary over the prospect of becoming involved in another Middle Eastern war, the vast majority of U.S. citizens strongly approve of sending Congress to Syria.

The New York Times/CBS News poll showed that though just 1 in 4 Americans believe that the United States has a responsibility to intervene in the Syrian conflict, more than 90 percent of the public is convinced that putting all 535 representatives of the United States Congress on the ground in Syria—including Senate pro tempore Patrick Leahy, House Speaker John Boehner, House Majority Leader Eric Cantor, and House Minority Leader Nancy Pelosi, and, in fact, all current members of the House and Senate—is the best course of action at this time.

"I believe it is in the best interest of the United States, and the global community as a whole, to move forward with the deployment of all U.S. congressional leaders to Syria immediately," respondent Carol Abare, 50, said in the nationwide telephone survey, echoing the thoughts of an estimated 9 in 10 Americans who said they "strongly support" any plan of action that involves putting the U.S. House and Senate on the ground in the war-torn Middle Eastern state. "With violence intensifying every day, now is absolutely the right moment—the perfect moment, really—for the United States to send our legislators to the region."

"In fact, my preference would have been for Congress to be deployed months ago," she added.

France Drops Out of the Coalition of the Willing

The coalition of the willing is now down to one. French President Francois Hollande said after a G-20 meeting France to wait for U.N. inspectors' report on Syria.

Obama can stick with his "world must act" message, but the world is increasingly fed up with Obama's rush to war message.

Totally-Go-It-Alone Ironies

ABC's Rick Klein noted historical ironies in Obama Faces Go-It (Almost)-Alone Decision On Syria.

President Obama will be alone should he choose to act militarily against Syria, for nearly all intents and purposes. He won't have the public behind him; nearly 8 in 10 Americans say they won't support military action without congressional approval. The vote in Parliament yesterday means he won't even have Great Britain. The historical ironies run deep. "Just words," it turns out, matter. And a man who would not be president except for his harsh critique of "dumb wars" and go-it-alone foreign policies is poised to engage in new military action virtually alone.

Note: The above was written on August 30, before France dropped out. Almost-Go-It-Alone has become Totally-Go-It-Alone.

Is Obama's Peace Price Losing Its Luster?

ABC's Abby Phillip notes: "Perhaps the most profound issue surrounding my receipt of this prize is the fact that I am the commander-in-chief of the military of a nation in the midst of two wars," Obama said in his acceptance speech. On the bring [brink] of a military strike on Syria, Obama is also dogged by the irony that his allure to liberals in the Democratic primary when he ran for president in 2008 stemmed largely from his opposition to the Iraq war. Obama never gave his peace prize back but some of his critics say Obama probably should. "There's a growing sense that the Nobel Peace Prize has been tarnished by the award to Obama," said Norman Solomon, whose website RootAction.org launched a petition earlier this year for Obama to give back the award.

Syrian Woman Rips Into McCain At Town Hall For His Support For Bombing Syria

Link if video does not play: Syrian Woman Rips Into McCain

The case regarding so-called "collateral damage" is extremely pertinent. Neither McCain nor Obama cares how many lives they destroy to get the regime change they want (then when they get the regime change they will not be happy with the result).

Let Obama Make the Case (To the Syrian People, Not US Congress)

In addition to Congress, I propose we send Nobel Peace Prize winner President Obama to Syria to plead his case for war to the Syrian people.

President Obama and Senator McCain should go first.

In the meantime, please Sign the Petition to Revoke Obama's Nobel Peace Prize

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

"Grand Coalition" Led by Merkel, Not Going to Happen; Expect a Shocker in Germany Election

Posted: 06 Sep 2013 10:42 AM PDT

I am going to stick my neck out with a pair of predictions:

Forget about a "Grand Coalition" led by Merkel. It's not going to happen.
The AfD anti-euro party will be in the next German parliament.

AfD had been polling around 2.5%. However, in the wake of Finance Minister Wolfgang Schäuble (CDU) stating a need for more aid for Greece, one pollster has AfD at 4%.

Reader Bernd from Germany (not AfD party leader Bernd Lucke) says the 4% figure is significant. If a party shows four percent in polls, potential voters are drawn in because they no longer fear their vote will be "lost", due to the 5% threshold.

The election is on September 22. Yet 30 percent of voters are still undecided.

Coalition Possibilities

"Same" CDU/CSU + FDP
"Grand Coalition" CDU + SPD led by Merkel
"Grand Coalition" CDU + SPD led by someone else
"Red Green Coalition" SPD + Grüne (Greens) + DieLinke
"CDU/CSU+AfD Coalition"

IF FDP can reach 5% of the vote, it is possible the same yellow-black coalition (CDU/CSU+FDP) rules as today. If FDP fails to reach 5%, then several alternate scenarios come into play:

There has been no talk at all of possibility number five above. Yet, if AfD can gather 6-7% (a number I think is possible), then there could be a coalition that includes AfD.

None of the "Grand Coalitions" seem stable.

Reader Bernd Comments

FDP does not make (or barely makes) the 5% margin in two polls

AfD is at 4% in at least one poll

35% of voters are undecided, so much movement to come

Recent momentum has been away from CDU

In the "undecided" voter column, Steinbrück leads 44% over Merkel 38%.

A big problem for CDU and Merkel is to get their supporters to vote. CDU and Merkel followers are deeply convinced that Merkel has such a massive lead, that there is no cause for fear.

The State elections in Bavaria are held one week before federal elections. In Bavaria, Steinbrück's SPD will be trounced. Less than 20% of popular votes are a real possibility and might put a serious damper on the mood for the SPD in the last week of federal campaigning.

Die Linke is stable. However, many "Die Linke" voters are probably hidden in the undecided block. I would give them more than 9%

After reading, analyzing and comparing statistics, figures and the whole nine yards, my latest prediction is as follows:

CDU/CSU: 37%

SPD: 24%

Grüne: 11%

Die Linke: 10%

AfD: 06%

FDP: 05%

Total: 94%

Lost votes due to 5% threshold: 6%

I have the most serious difficulty to assess FDP. It is really possible, they might not make it into Parliament. Reason: most Germans highly prefer a coalition between CDU/CSU and SPD over the current one of CDU/CSU and FDP.

Such being the case, strategic voters might support CDU directly, rather than giving their votes to FDP (remember, Germans have two votes, so "strategic splitting" is common).

The real dark horse is the AfD.

AfD is perceived to be positioned firmly in the center-right of the German political spectrum.

In reality, this is not so. AfD is more libertarian than right. But who would know the difference in a country, where being called a NAZI has become an every day affair of political opponent bashing.

If FDP and AfD make it into Parliament, a coalition between CDU/CSU/AfD/FDP might be an option for a stable Government. In reality, their positions are a lot closer together, than most people think or perceive.

Mr. Steinbrück will not be part of a "grand coalition".

Clearly, and there can not be any doubt: German voters want a grand coalition, with Mm Merkel as Chancellor and Steinbrück as second in command. Yet, Steinbrück has repeatedly said, again and again, he can only be the "King of Schnitzel" or he will resign as a politician after the campaign. I tend to believe him!

SPD party leader, Mr. Gabriel, may enter a Grand Coalition, but such an arrangement may not be very stable. If SPD goes for such a coalition, it will be the final demise of that party.

Best wishes
Bernd

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Establishment Survey: +169K Jobs, June and July Revised Lower; Household Survey: Employment -115,000, Not in Labor Force +516,000; BLS in Wonderland

Posted: 06 Sep 2013 08:31 AM PDT

Initial Reaction

The establishment survey showed a gain of 169,000 jobs.

For the second consecutive month, the previous two months were revised lower. The employment change for July was revised down by 58,000 (from +162,000 to +104,000). Last month the BLS revised June employment down by 7,000 (from +195,000 to +188,000).

This month, the BLS said June was still not correct and revised June lower by another 16,000 to +172,000.

See the change in pattern here? Earlier in the year, revisions were to the plus side.

In spite of the above, the unemployment rate dropped 0.1 to 7.3%. After all, it's the household survey that determines the unemployment rate, not the establishment survey baseline jobs number. So let's take a look at the factors.

Explaining the Unemployment Rate Drop

Employment fell by 115,000
Those in the labor force fell by 312,000
The civilian population rose by 203,000.
The Participation Rate (The labor force as a percent of the civilian noninstitutional population) fell 0.2 to 63.2%, beating the low of 63.3% dating back to 1979.

Employment fell by 115,000 but the labor force fell more (in spite of a population rise of 203,000). That's why the unemployment rate dropped.

August BLS Jobs Statistics at a Glance

Payrolls +169,000 - Establishment Survey
US Employment -115,000 - Household Survey
US Unemployment -198,000 - Household Survey
Involuntary Part-Time Work -334,000 - Household Survey
Voluntary Part-Time Work +211,000 - Household Survey
Baseline Unemployment Rate -0.1 - Household Survey
U-6 unemployment -0.3 to 13.7% - Household Survey
Civilian Labor Force -312,000 - Household Survey
Not in Labor Force +516,000 - Household Survey
Participation Rate -0.2 at 63.2 - Household Survey

Quick Notes About the Unemployment Rate

The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data.
In the last year, those "not" in the labor force rose by 1,554,000
Over the course of the last year, the number of people employed rose by 2,006,000 (an average of 167,000 a month)
In the last year the number of unemployed fell from 12,483,000 to 11,316,000 (a drop of 1,167,000)
Percentage of long-term unemployment (27 weeks or more) is 37.9%, an increase of 0.9 from last month.
The mean duration of unemployment also increased this month, from 36.6 weeks to 37 weeks.
7,911,000 workers who are working part-time but want full-time work. A year ago there were 8,043,000. There has been almost no improvement in a year. This is a volatile series.

August 2013 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) August 2013 Employment Report.

Total nonfarm payroll employment increased by 169,000 in August, and the unemployment rate was little changed at 7.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade and health care but declined in information.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted

Employment History Since January 20000

click on chart for sharper image

Change from Previous Month by Job Type

Hours and Wages

Average weekly hours of all private employees rose 0.1 to 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average hourly earnings of all private workers rose $0.05 to $24.00. Average hourly earnings of private service-providing employees rose $0.05 to $23.76.

Real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly. For 2013, one needs to factor in the increase in payroll taxes for Social Security.

For further discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2012

Birth Death Model Adjustments For 2013

Birth-Death Notes

Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.

In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.

For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.

Table 15 BLS Alternate Measures of Unemployment

click on chart for sharper image

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 7.3%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 13.7%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Labor Force Factors

Discouraged workers stop looking for jobs
People retire because they cannot find jobs
People go back to school hoping it will improve their chances of getting a job
People stay in school longer because they cannot find a job
Disability and disability fraud

Were it not for people dropping out of the labor force, the unemployment rate would be over 9%. In addition, there are 7,911,000 people who are working part-time but want full-time work.

Grossly Distorted Statistics

Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage coupled with a massive increase in part-time jobs starting in October 2012 as a result of Obamacare legislation.

Wonderland Statistics

Compared to recent Gallup surveys, these BLS stats regarding the base unemployment rate and the alternative measures as well are straight from wonderland. For details, please see Gallup Says Seasonally-Adjusted Unemployment Climbs to 8.6%; Who to Believe (Gallup or the BLS)?

I believe Gallup. Thus, I expect more downward revisions in jobs, and upward revisions in the unemployment rate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mish's Global Economic Trend Analysis

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