The unemployment rate is steady at 10% after a -85,000 jobs number. Of course, there was also another HUGE drop in the labor force which artificially makes the unemployment rate look better than it really is. This has been the real story for the last several months and will continue to be the untold story of 2010.

The Birth/Death model is also a total farce. I will discuss this more in a future post.

For whatever reason, I have good instincts when it comes to the stock market, economy, and investments. I always look at the numbers, but even if the numbers are as good as can be, if my instincts tell me to stay away then that is what I will do.

I often watch TV and see an “expert” on the economy bombard the viewer with data points that back up whatever his or her forecast is. Lets take commercial real estate as an example. The trendy forecast lately seems to be that commercial real estate has bottomed or is in a nascent recovery already. I have seen this forecast made countless times over the last month or two. Had I been on the show when this “expert” gave this forecast I would have replied with this little story.

For the past 12 months I have been driving past a newly constructed strip mall. It looks very nice and has ZERO tenants. For the past 9 months, there has been a huge sign out front saying they will give you 12 months free rent if you sign a lease there. Today, there are ZERO tenants. They are literally giving away free retail space for a year and can’t get one tenant! This is a good neighborhood with good average income and a below average crime rate. Does this square with a commercial real estate recovery?

Inevitably, the “expert” would tell me that while there certainly are still some areas struggling, my ANECDOTE is just that and does not represent the overall commercial real estate market as the “data” clearly shows.

Let me tell ya something…If it ever comes down to my instincts and anecdotes vs. “expert” data or government (BLS) statistics; I’ll take my instincts and anecdotes EVERY SINGLE TIME.

Don’t be afraid to trust your instincts, especially when you have the track record to back it up.

(By the way, be on the lookout for the possibility of a LUDICROUS seasonal adjustment to the unemployment report upcoming. The government can and will make the jobless rate literally ANYTHING IT WANTS.)

I resolved a few years ago to literally never believe government statistics. After years of study, I have come to the conclusion that the government produced unemployment rate should almost always be 50% or so higher than what it is purported to be.

We now sit around 10%, meaning that it should be closer to around 15%. Other statistics minded people think it should be even higher than that, but hey I’m a nice guy. And no, I am not talking about the U6 number which includes underemployed people. The U6 number should also be 50% higher taking it from around 17% to around 25%.

The problem is, the government and their media allies have a virtual stranglehold on the data and information flow. The Internet is breaking their monopoly up, but it remains a tough nut to crack.

“Stranglehold” - Ted Nugent (via YouTube)

Here is a great chart that a blogger has been updating as the months pass. It illustrates what is happening vs what the White House predicted in light of their massive “stimulus” package.

You can see just how wrong the super geniuses in the White House have been. The problem is that this mistake cost us a trillion dollars in the failed stimulus bill alone.

Today the “official” unemployment rate has risen to 10.2%. It would be alot higher if it was not for the BLS using a smaller number for the labor force. They do this because so many have given up looking for jobs at all.

[mp3_embed blog_plyrs="4" playlst="http://www.solitudeholdings.com/images/Carl_Lewis_Uh_oh.mp3" colors="#900345" id="1"]

Here is a great chart that a blogger has been updating as the months pass. It illustrates what is happening vs what the White House predicted in light of their massive “stimulus” package.

You can see just how wrong the super geniuses in the White House have been. The problem is that this mistake cost us a trillion dollars in the failed stimulus bill alone.

Today the “official” unemployment rate has risen to 9.8%. It would be alot higher if it was not for the BLS using a smaller number for the labor force. They do this because so many have given up looking for jobs at all.

[mp3_embed blog_plyrs="4" playlst="http://www.solitudeholdings.com/images/Carl_Lewis_Uh_oh.mp3" colors="#900345" id="1"]

Expect some good GDP numbers for the next 3-6 months due to an inventory build. The media will then tell you how everything is great now.

After you stop laughing, you can expect slow growth to return after the inventory build loses steam. As discussed here for months, slow growth and negligible net job creation is the scenario for the foreseeable future.

Here is Rick Santelli today laying the smack down on Steve “command and control” Liesman. Rick is one of the few reasons to watch CNBC these days. Santelli has always been rightfully upset about all the bailouts. Also, notice how he admonishes the corrupt press for not covering the several hundred thousand (at least) that marched on Washington on Saturday to protest debt, spending, and health care.

Last week the White House claimed their stimulus package has already “saved or created 1 million jobs.”

If you believe that statement, then you are too dumb to read this blog and you should not waste your time here. Saved or created is the new term used since net new jobs are not being created. In fact, we are losing jobs every month. The media should challenge this laughable assertion, but sadly they barely challenge anything coming from the White House these days.

The White House says their plan will “save or create” 3.5 million jobs. Well, even if we believe this saved or created nonsense (which I don’t) then $787 billion divided by 1 million jobs created so far equals $787,000 per job! If we take their big number of 3.5 million jobs then it equals $224,857 per job! Only an imbecile or a liar would think this is a good return on investment.

As you can see, I have no ads or anything on this blog. I do not write here to make money. I do not need money from this blog. I do it because many people ask me what I think about the economy and how to invest and believe it or not, I like to help people. People have emailed me and thanked me for my writing as they have made good money the past few months as well as avoided big losses. So, if people don’t want to read what I have to say, that is fine with me. I couldn’t care less.

Now, back in March I was a mere few days off calling the market bottom when I told you I was getting back in. I also predicted the snap back rally and gave you the range amount of DOW points it would be. I also told you then that unemployment would reach 10% plus when the White House said it would be 8%. I also told you to make some easy money by shorting the long treasury bond until the 10 year hit 4% where it would rally again sending the yield lower. Finally, I told you the White House debt forecast would be way off as they underestimated the debt they are causing.

So, if you do believe the White House and their 1 million jobs saved or created nonsense over me then I must ask why you would believe them when they have been wrong, and I have been right? They said if they passed their $787 billion stimulus (1 trillion with interest) we would peak at 8% unemployment. Now it is 9.7% and rising. They said their debt forecast would be one thing, and then had to admit it was off by $2 trillion.

Why in the world would you believe this “saved or created” jobs nonsense? If you don’t want to believe me that it is nonsense, fine. I don’t care. However, what have they done to make you believe them?

Today, economic advisor to President Obama Christina Romer declared that the stimulus recovery plan is working.

Remember, this is the same woman who said that if we pass the stimulus bill, (that she helped design) the unemployment rate would top out at 8%. Today it is 9.5% and will rise!

This woman advises the President. That should scare the hell out of you. She is an idiot and should resign. She helped author a stimulus plan that with interest will cost us $1 trillion, while failing to stop job losses. 

Bear that in mind, when she gives you more numbers in the future. Where she is pulling them from, I have no idea.

Here are some interesting tidbits before the weekend.

The more I look at it, the more I think this rally in the market has been about businesses cutting costs rather than growing revenue, thus keeping earnings respectable. However, they cant keep cutting costs forever. They cant keep laying off people forever. After all, they have cut deep and laid off millions already.

Until revenue grows which then facilitates even higher profits, which then brings new jobs, how can anyone say we have a strong recovery?

It also appears to me that there has been a massive reduction in short interest, meaning shorts have covered thus pushing the market higher. This could suggest the rally is not being fueled by an influx of new money and new investors.

Also, President Obama’s two big issues sans the failed stimulus (waste) package are cap and trade (tax) and health care reform (destruction.)

As cap and trade could be in trouble in the senate, and health care facing trouble just getting out of the house, maybe the market likes the idea of two bills that would do terrible economic damage dying a slow miserable death. I know I do.

“I am from the government and I am here to help.” This statement is scarier then the brilliant Alfred Hitchcock’s “Psycho.” Be warned, Norman Bates Is on the loose and he has trillions to spend. 2009 will be a unique period for world markets. Led by the United States, governments around the world will borrow, print, and spend incredible amounts of money never before seen in history in order to restore confidence, liquidity, and credit to the marketplace. By my analysis, the results of these actions will be mixed at the very best and by my humble assessment, a total failure. On January 12, 2009 I made a post titled “The Last Capitalist.” As briefly as I could, I wrote that free markets and the ideas that led to the last 25 years of prosperity were being thrown over the side due to our current economic pain and that only a select few were speaking out against the massive government spending (wasting) that was going on in order to stimulate the economy. Their plan is doomed to failure and as a solutions oriented guy, I provided a better alternative. Of course, the President and the Congress ignored the last capitalists like me and will spend more money then ever before, providing little to no help to our ailing economy. Now we are stuck paying interest on that money for the rest of our lives most likely.

While the government has meddled in the economy for decades, it has reached a high point recently. For example, the government has encouraged risky loans for decades, accelerating the process to the breaking point during the last few years. I would argue that this means there never really was a free market in housing, and therefore the housing collapse was not a direct result of the free market at all, but a complicated confluence of events that started with government intervention. For example, the rising price of oil contributed to consumers pulling back their spending and hurting their ability to afford their homes. Had government not made it illegal to drill for more oil, perhaps the price might never have been as high as it was. This is another government induced problem that should have never existed in energy markets, but the government interfered and we had $148 dollars a barrel before the whole economy broke and demand crashed. This is not to say however that any government involvement invalidates the market as free. The government provides FDIC insurance for bank deposits, and I would never argue this is an assault on the free market. So, like most things, it depends. All government involvement is not created equal obviously but most of the time it is bad, very bad.

It seems to me that we are facing two possible outcomes. One is that we take this short hiatus from the free market for a few years and muddle along, we come to our senses, institute broad based tax cuts, reform government spending, mainly entitlements, and begin to tackle issues like energy and immigration which have long term financial implications. The second option is that government led by an incompetent congress institutes so many taxes, regulations, and restrictions on capital and capital formation that businesses not only ship more jobs overseas, but actually move their entire operations abroad depriving the country of needed tax revenue. We are given phony tax rebates (not rate reductions) that do nothing to create long term jobs and suffer for 15 to 20 years under a mountain of debt that strains our budgets amid skyrocketing social security and Medicare obligations. Growth is nowhere to be found in this scenario.

The outcome could lie between these two points, but my estimation is that we will be much closer to one then the other. Obviously, the second option is not a good one. Of course, even the incompetent US Congress should come to their senses before we reach thunderdome, but the numbers are unavoidable. Taxes either have to go up, or benefits have to come down. It is that simple. It will be politically impossible for almost anyone to tell the American people that they need to receive fewer entitlements, but that is exactly what must be done. Despite this reality, I believe it will not be done and therefore am betting on tax hikes that will hurt our growth and competitiveness further. Luckily, we have time to solve these long term financial problems as we have a lot of money to waste before we break. I hope we see the light in time. I mention it in this post because I believe it is vital to understand how inflation, government spending, and debt could plunge us into a 1.5% growth rate for a decade or more and a stock market that doesn’t revisit 2007 highs for 20 years. Oh yeah, and crippling inflation. Just ask Japan, they have seen this up close and personal with their stock market. I will revisit these long term issues in future posts, but I thought it wise to plant the seed now.