Mish's Global Economic Trend Analysis

ECRI's Lakshman Achuthan Says US in Recession Now; That Makes Three of Us
House Approves Sweeping, Warrantless Electronic Spy Powers; "The Program"; Are Your Emails Being Monitored? Mine Likely Are
Reader Comments on Italy's Insane Labor Rules

ECRI's Lakshman Achuthan Says US in Recession Now; That Makes Three of Us

Posted: 14 Sep 2012 12:34 PM PDT

Lakshman Achuthan, CEO of ECRI says the US recession started in June.

Sept. 13 (Bloomberg) -- Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute, talks about the U.S. economy. Achuthan speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." Julian Callow, chief international economist at Barclays Capital, also speaks.

In the interview above, Julian Callow at Barclays made the statement he did not think the US was in recession because the unemployment rate was trending down.

Callow is clearly not digging into the numbers and/or Callow simply fails to understand how the household survey even works (and it is the household survey that established the unemployment rate).

Yes, Virginia, It's a Recession

Ironically, two consecutive horrendous household surveys following months of weak regional Fed manufacturing surveys was enough for me to say on September 7, 2012 Yes, Virginia, It's a Recession.

Quick Notes About the Unemployment Rate

US Unemployment Rate -.2 to 8.1%

This month the number of people employed fell by 119,000.

In the last two months, the number of people employed fell by 314,000!

In the last year, the civilian population rose by 3,695,000. Yet the labor force only rose by 971,000.

This month the Civilian Labor Force fell by 368,000.

Last month, those "not" in the labor force increased by 348,000 to 88,340,000, another record high.

This month we set another record high with a whopping 581,000 dropping out of the labor force. If you are not in the labor force, you are not counted as unemployed.

In the last year, those "not" in the labor force rose by 2,723,000

Over the course of the last year, the number of people employed rose by 2,347,000.

Participation Rate fell .02 to 63.5%;

There are 8,031,000 workers who are working part-time but want full-time work, a decrease of 215,00. This one the only bright spot in the report.

Long-Term unemployment (27 weeks and over) was 5.033 million a decline of 152,000 (likely an artifact of the decline in the labor force).

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.

In response to that weakness the Fed responded with Panic! and I repeated my statements on employment and unemployment.

I am going to reiterate my belief that the household survey tends to lead and today's panic suggests the Fed believes that as well.

Here are two key Household Survey figures.

In the last two months employment dropped by 314,000.

In the last two months the labor force fell by 518,000 while those not in the labor force rose by an amazing 929,000!

Household Survey Data

click on chart for sharper image

In the last year, the civilian population rose by 3,695,000. Yet the labor force only rose by 971,000.

Those not in the labor force rose by 2,723,000 to yet another record high 88,921,000.

That is an amazing "achievement" to say the least, and one that has the Fed in panic mode.

That Makes Three of Us

John Hussman announced on September 10, 2012 in Late-Stage, High-Risk "I continue to believe that the U.S. joined an unfolding global recession, most probably in June of this year."
Lakshman Achuthan stated on September 13, 2012 he thought the recession had started (not just one was coming)
I stated the same thing on September 7, 2012 but that does not necessarily make me first. I have not seen everything this group has said, and there could be others as well.

Regardless, it's a small group, and if I am wrong I am in good company. We may not know for another six months. It's in the hands of the NBER.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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House Approves Sweeping, Warrantless Electronic Spy Powers; "The Program"; Are Your Emails Being Monitored? Mine Likely Are

Posted: 14 Sep 2012 09:35 AM PDT

Is the government watching your emails?

They are probably watching mine. The House just approved extending an eavesdropping bill another five years. The National Security Agency is collecting a staggering amount of Americans' conversations, but only examining a small slice of them, or so they say.

The bill specifically allows eavesdropping without cause, if the government believes the conversation is with someone who lives outside the US.

Since I exchange emails with people from all over the world, the government probably has a huge file on "Mish".

Worse yet, the Government's amazing interpretation of "out of the country" applies to anyone in the country as long as the government is doing so on grounds they are looking for al-Qaida.

So if you are Muslim, Jewish, or in any other targeted religious or ethnic group, everything you do or say is probably in a government file somewhere.

"The Program"

The New York Times Op-Ed "The Program" shows a video from The filmmaker Laura Poitras profiles William Binney, a 32-year veteran of the National Security Agency who helped design a top-secret program he says is broadly collecting Americans' personal data.

I have been detained at the border more than 40 times. Once, in 2011, when I was stopped at John F. Kennedy International Airport in New York and asserted my First Amendment right not to answer questions about my work, the border agent replied, "If you don't answer our questions, we'll find our answers on your electronics."' As a filmmaker and journalist entrusted to protect the people who share information with me, it is becoming increasingly difficult for me to work in the United States. Although I take every effort to secure my material, I know the N.S.A. has technical abilities that are nearly impossible to defend against if you are targeted.

The 2008 amendments to the Foreign Intelligence Surveillance Act, which oversees the N.S.A. activities, are up for renewal in December. Two members of the Senate Select Committee on Intelligence, Senators Ron Wyden of Oregon and Mark Udall of Colorado, both Democrats, are trying to revise the amendments to insure greater privacy protections. They have been warning about "secret interpretations" of laws and backdoor "loopholes" that allow the government to collect our private communications. Thirteen senators have signed a letter expressing concern about a "loophole" in the law that permits the collection of United States data. The A.C.L.U. and other groups have also challenged the constitutionality of the law, and the Supreme Court will hear arguments in that case on Oct. 29.

Laura Poitras is a documentary filmmaker who has been nominated for an Academy Award and whose work was exhibited in the 2012 Whitney Biennial. She is working on a trilogy of films about post-9/11 America. This Op-Doc is adapted from a work in progress to be released in 2013.

Loopholes Widened, Warrantless Electronic Spy Powers Approved

Wired reports House Approves Sweeping, Warrantless Electronic Spy Powers.

The House on Wednesday reauthorized for five years broad electronic eavesdropping powers that legalized and expanded the George W. Bush administration's warrantless wiretapping program.

The FISA Amendments Act, which is expiring at year's end, allows the government to electronically eavesdrop on Americans' phone calls and e-mails without a probable-cause warrant so long as one of the parties to the communication is believed outside the United States. The communications may be intercepted "to acquire foreign intelligence information."

The government has also interpreted the law to mean that as long as the real target is al-Qaida, the government can wiretap purely domestic e-mails and phone calls without getting a warrant from a judge. That's according to David Kris, a former top anti-terrorism attorney at the Justice Department.

The government does not have to identify the target or facility to be monitored. It can begin surveillance a week before making the request, and the surveillance can continue during the appeals process if, in a rare case, the secret FISA court rejects the surveillance application. The court's rulings are not public.

The vote was 301-118 in favor of passage, with 111 Democrats and seven Republicans voting no.

According to one former Justice Department official, the FISA Amendments Act gives the government nearly carte blanche spying powers.

The National Security Agency told lawmakers that it would be a violation of Americans' privacy to disclose how the measure is being used in practice. The NSA said the "NSA leadership agreed that an IG (Inspector General) review of the sort suggested would further violate the privacy of U.S. persons."

Got That?

Please read the last paragraph above carefully.

Spying on people is not an invasion of privacy, but somehow disclosing the number of people being spied upon, as well as how they are being spied upon is an invasion of privacy.

Any legislator voting for this preposterous act is unfit for public office in my opinion. Trashing the US constitution in this manner is not acceptable.

Addendum:

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Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Reader Comments on Italy's Insane Labor Rules

Posted: 14 Sep 2012 12:31 AM PDT

In response to Why OMT Cannot Possibly Solve Anything; Italy's Insane Labor Rules, I received a nice email from reader Andrea who is from Italy but now lives in France.

Hi Mish,

I read with great interest your post on this topic and as you can imagine (probably expect) I have some comments to offer.

Your article is totally correct except for minor, insignificant details.

Amazingly, the Wall Street Journal report you cite actually underestimates (yes, under!) the burden of bureaucracy that Italian entrepreneurs have to deal with, and the time they spend with it.

Italian entrepreneurs are heroes. They have many problems:

Very high cost of energy

Lack of infrastructure (bad roads for example)

Massive bureaucracy

Civil justice system completely dysfunctional (I do not have exact figures but the average delay to end a civil judgement is much above the European average)

Public administration pays invoices with huge delay

High pressure from criminal organizations in some parts of Italy

Lack of financing

Very complex and sometimes contradictory laws

High level of corruption within public administration and politics

Article 18, a section of the Workers Statute makes layoffs for economic reasons very, very difficult and it is applicable to companies that have 15 or more employees.

This is a major reason why Italian companies have so few employees. The other one is that Italian company are mainly family run.

However, there is a workaround (be aware that Italians always have workarounds!) and the workaround explains the preponderance of micro-companies.

Many people today are hired with temporary contracts. With "projects contracts" the worker is not on the payroll of the company: rather the worker appears as a "consultant", hired for a certain period and has (in many cases) his "VAT number" to invoice the employer.

Contract work has much lower social protections and is widely spread among the youngest people.

That said, Italians entrepreneurs are heroes, because most of the small ones in the most competitive and unprotected environments put mortgages on their homes to get financing to make their companies survive during this period.

Despite the business-hostile environment, Italy is the third leading exporting country in Europe, behind only Germany and France.

Germany Exports
France Exports
Italy Exports

Put Italian entrepreneurs in a business-friendly environment and they will create great companies and great value, as they did after WWII.

Best regards,

Andrea

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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