If Employment Is So Great, Why Are Withholding Taxes Declining?

by Charles Hugh-Smith
It’s difficult to have a meaningful national debate about economic policy when “headline numbers” are juiced to make things appear rosier than reality.
Since unemployment statistics are either suspect or blatantly bogus, we must look for other less manipulated statistics for some modicum of truth. Key statistics of employment, income and production are vital propaganda tools for the status quo, and the temptation to adjust them to manage perceptions is apparently irresistible.
Here in the U.S., unemployment statistics are a travesty of a mockery of a sham:
Real Unemployment Rate Rises To 11.4%, Difference Between Reported And Real Data Rises To Record (Zero Hedge)
Guggenheim On The US Jobs Growth “Mirage”
In China, output is routinely juiced to fantasy levels:
Chinese Province ‘Busted’ For Fake Data; Exaggerated 2013 Output By Over 150% (Zero Hedge)
To get some semi-accurate sense of China’s actual output, as opposed to official propaganda, skeptics look to electricity consumption as an imperfect but better-than-lies gauge of actual economic activity.
Here in the U.S., longtime correspondent B.C. suggests we look at withholding taxes as a more accurate measure of employment than the ginned-up official numbers.Withholding taxes are payroll taxes, and as such they are a direct measure of payrolls and earned income. (Self-employed people who don’t issue themselves monthly or weekly paychecks pay their withholding taxes quarterly.)
In other words, withholding taxes (i.e. Social Security, Medicare and estimated income taxes) are a very broad and accurate measure of the earned income of both employees and self-employed.
Since many high-earning professionals such as attorneys and accountants are self-employed, the earnings reported by the self-employed are significant. The self-employed have some control over when and how they report earnings, and many chose to report income in late 2012 rather than in 2013 to avoid the tax increases that kicked in on January 1, 2013.
This accounts for the spike in wages and withholding taxes in late 2012.
Here is a chart of wages/salaries and withholding receipts:
Wages/salaries have trended up since early, but growth has flattened recently. Withholding taxes are declining.

Here are employment and withholding receipts. Civilian employment has increased by some 2.5 million jobs since January 2012, but withholding receipts are actually lower than January 2012. This strongly supports what many others have already observed: the substitution of lower-wage part-time jobs for full-time employment. It’s difficult to conjure up any other explanation for employment rising and payroll taxes declining. Massive cuts in wages would have the same consequence, but there is no evidence of widespread reductions in hourly wages.

Here are employment and wages/salaries. We see the same basic dynamic here: the number of jobs continues increasing but wages/salaries are trending flat to down.

The con being played here is the assumption that more jobs means more wages which means things are getting better and better in every way, every day. If payroll withholding taxes are declining, and wages/salaries are flatlined, things are not getting better and better in terms of earned income flowing into household bank accounts, purses and wallets.
About 20 million working-age adults have supposedly dropped out of the U.S. labor force (and therefore become zombies who are not counted in tallies of unemployment) since January 2001. This is roughly comparable to the entire workforce of Italy (22.8 million) or South Korea (25 million).
If we drop another 15 million unemployed from the labor force, the unemployment rate will fall to near-zero. “Unemployment rate drops to 1%” will make a warm and fuzzy headline, but it won’t mean there are more jobs or higher earned incomes. An official account of the economy based on 20+ million unemployed people not counted as unemployed is a shameful lie.
Record 90.5 Million Out Of Labor Force As Half A Million Drop Out In One Month (Zero Hedge)
It’s difficult to have a meaningful national debate about economic policy when perceptions and “headline numbers” are juiced to make things appear rosier than reality.
My new book The Nearly Free University and The Emerging Economy (Kindle eBook)is available at a 20% discount ($7.95, list $9.95) this week. Read the Forword, first section and the Table of Contents.

Global Currency Reset In Process: U.S. Ship of State is Sinking, The Rest of The World Is Walking Away From U.S. Treasuries & Dollar, And Wants To Use A New Currency To Escape The Coming Global Inflation

http://usawatchdog.com/u-s-ship-of-st… According to Dr. Jim Willie, the rest of the world is tired of the money printing by the Fed and wants to use a new currency to escape the coming global inflation of a dollar that can quickly lose its buying power. Dr. Willie says, “This is financial survival. Nations need to depart from the dollar, and the first ones that do will be the survivors, and laqst ones will enter the third world.” As far as Syria, Dr. Willie says it’s not about chemical weapons, but about pipelines and our adversaries gaining economic advantage. Dr. Willie claims, “The U.S. is obstructing capitalism and commerce. That is the problem.” Join Greg Hunter as he goes One-on-One with Jim Willie, Publisher of The Hat Trick Letter, which can be found on

Russia to Brazil Intervention Adds to U.S. Debt Distress
Investors suffering the worst losses in Treasuries since at least 1978 can add dollar sales by emerging-market central banks to their list of challenges.
Speculation that the Federal Reserve, the biggest buyer of Treasuries, will reduce its purchases sent U.S. debt down 4.1 percent this year and boosted the dollar against developing-nationcurrencies for four straight months, matching the longest streak since 2001, according to Bloomberg data. India, Brazil, Russia and Indonesia have intervened in foreign-exchange markets, and dollar sales mean liquidating Treasuries, according to bond traders at Scotiabank and Bank of America Corp.
While the $48 billion drop in foreign central bank holdings at the Fed since a record in June is less than half of the $113 billion in withdrawals from U.S. bond funds in the past three months, they mark a change in trend. Foreign ownership of Treasuries fell 0.6 percent in the first half of 2013, poised for the first full-year decline in data going back to 2000 and a departure from the 10 percent annual gains seen since 2006.
“There is a lack of buyers in the Treasury market,” Ali Jalai, a Singapore-based trader at Scotiabank, a unit of Canada’s Bank of Nova Scotia, said in a telephone interview Sept. 4. “Selling by central banks to back up their currencies exacerbates the situation.”
…
“The buyers of American Treasuries are going to be American private-sector investors going forward to a greater degree,” Kit Juckes, global strategist at Societe Generale SA, whose U.S. unit is a primary dealer, told Bloomberg Television on Sept. 2. “Tapering is an exercise now in price discovery. What is the clearing price for U.S. government securities when the biggest buyers are walking away?”
http://www.bloomberg.com/news/2013-09-08/russia-to-brazil-intervention-adds-to-u-s-debt-woes-amid-losses.html
Who Is Going To Buy Our Debt If This War Causes China, Russia And The Rest Of The World To Turn On Us?
Can the U.S. really afford to greatly anger the rest of the world when they are the ones that are paying our bills?  What is going to happen if China, Russia and many other large nations stop buying our debt and start rapidly dumping U.S. debt that they already own?  If the United States is not very careful, it is going to pay a tremendous economic price for taking military action in Syria.  At this point, survey after survey has shown that the American people are overwhelmingly against an attack on Syria, people around the globe are overwhelmingly against an attack on Syria, and it looks like the U.S. Congress is even going to reject it.  But Barack Obama is not backing down.  In fact, ABC News is reporting that plans are now being made for a “significantly larger” strike on Syria than most experts had expected.
If Obama insists on going forward with this, it will be the greatest foreign policy disaster in modern American history.
…
According to the U.S. Treasury, foreigners now hold approximately 5.6 trillion dollars of our debt.  Over the past couple of decades, the proportion of our debt owned by foreigners has grown tremendously, and today we very heavily depend on nations such as China to buy our debt.

At this point, China owns approximately 1.275 trillion dollars of our debt, and Russia owns approximately 138 billion dollars of our debt.
So what would happen if China, Russia and other foreign buyers of our debt all of a sudden quit purchasing our debt and instead started dumping the debt that they already own back on to the market?
In a word, it would be disastrous.
As I have written about previously, the U.S. government will borrow about 4 trillion dollars this year.
…
http://theeconomiccollapseblog.com/archives/who-is-going-to-buy-our-debt-if-this-war-causes-china-russia-and-the-rest-of-the-world-to-turn-on-us
As The Fantasy Dies, Panic Will Ensue & Gold Will Soar
Today Bill Fleckenstein warned King World News that “as the fantasy dies,” panic will ensue and gold will soar.  Fleckenstein also predicted that the staggering 24% unemployment in the United States will get much worse in the future as people realize the Fed is trapped and the great unwind finally begins.  Below is what Fleckenstein, who is President of Fleckenstein Capital, had to say in this powerful interview.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/6_As_The_Fantasy_Dies,_Panic_Will_Ensue_&_Gold_Will_Soar.html
David Stockman: ‘Fiscal Crisis Coming Down Road’
The U.S. economy remains weak, and the government is headed for a fiscal meltdown, says former White House budget director David Stockman.
The economy grew 2.5 percent in the second quarter.
But, “when I look at trends, I don’t see any kind of [economic] recovery that’s sustainable. Industrial production is barely where it was in the fall of 2007, full-time jobs are still down 8 percent and median family income is down 8 percent,” he told CNBC and Yahoo’s Talking Numbers.
http://www.moneynews.com/newswidget/Stockman-fiscal-crisis-debt/2013/09/06/id/524178?
Global Currency Reset In Process: Russia & China Are Fed Up With The Dollar System & Dollar Hegemony, BRICS May Agree On $100 Billion Currency Fund, The Bankers of The World Are Fixing To Throw Away The U.S. Dollar As The Global Reserve Currency - August 30th, 2013
Read more at http://investmentwatchblog.com/global-currency-reset-in-process-russia-china-are-fed-up-with-the-dollar-system-dollar-hegemony-brics-may-agree-on-100-billion-currency-fund-the-bankers-of-the-world-are-fixing-to-throw-away-t/#q8zsgzWlFBSAZY46.99
Global Currency Reset In Process: The Fed Can’t Exit Easy Monetary Policy As USD Comes Under Attack, China and Russia Suggesting A New Bretton Woods, One Quadrillion Dollars of Derivatives Time Bomb Is Set To Explode - August 9th, 2013
Read more at http://investmentwatchblog.com/global-currency-reset-in-process-the-fed-cant-exit-easy-monetary-policy-as-usd-comes-under-attack-china-and-russia-suggesting-a-new-bretton-woods-one-quadrillion-dollars-of-derivatives-time-bomb/#jfjlL9yoYihZtGfW.99

China and Russia hold 1.440 Trillion Dollars in U.S. Debt, between them they account for over 25% of foreign holders of Treasuries…
The question isn’t who is going to buy when the Taper begins on the 15th of Sept, the question is, who is going to start the Selling Frenzy that buries us…
What people don’t understand is that all the Chinese and Russian’s have to do is begin selling Treasuries, driving the yield up, and this will cause Japan and many under capitalized banks around the world to begin selling for liquidity, that’s when the run on the dollar begins…
Once that begins in earnest, the game is over, the gig is up…
For people who don’t believe that last Thursday’s jump in the 10 yr Treasury Yield to over 3.01% was shot across our bow, then you just aren’t paying attention…
You want Doom out of this war, this is your doom!!!
Because within a month of a massive strike on Syria, the U.S. Dollar will be toast…

Saddletramp

IBM Blame Obamacare – Cutting Healthcare – IBM To Drop 110,000 Retirees From Health Care

IBM Blame Obamacare – Cutting Healthcare – IBM To Drop 110,000 Retirees From Health Care

The real state of the world economy is dire

We are now back to the “green shoots” era of false hope and total misunderstanding of the real state of the world economy. There are minor tidbits of good news that combined with manipulated and seasonally adjusted economic figures are giving politicians worldwide reason for spreading their optimistic gospel of recovery that has nothing to do with reality.

A world based on debt

How can a world with $250 trillion of debt and over $1 quadrillion of worthless derivatives ever recover? Of course it can’t, especially since this is a world that is supported by legs of worthless printed paper money – legs that are just getting longer and more unstable by the day as trillions are added to the debt every year.
Wherever we turn Europe, USA, Japan and many other nations, the situation is totally beyond repair. But as I have said in recent interviews and articles, it is not just beyond repair but we are likely to be at the end of a major economic cycle that started at the end of the Dark Ages. I wrote about this already back in 2009 in my article “The Dark Years Are Here” . Major economic cycles take a long time to develop and if we are now at the beginning of a major downturn in the world economy, people living today will only experience the very beginning of the downturn. But sadly the beginning will be a major and very unpleasant upheaval that virtually nobody will escape.
We have had a century of false prosperity based on printed money and credit. In the last 100 years we have seen the creation of the Fed in the US (a central bank owned, created and controlled by private bankers) combined with fractional reserve banking (allowing banks to leverage 10 to 50 times), exploding government debt and a derivatives market of $1.4+ quadrillion. These are the principal reasons why the world economy has expanded in the last century and particularly in the last 40 years. These four extremely shaky legs, Central bank printing, Bank leverage, Government borrowing and Derivatives manufacturing have created a world of delusional wealth and illusory prosperity. Also, there is a total absence of moral and ethical values. We are in the final stages of an era of extreme decadence, an era that sadly cannot and will not have a happy ending.

Europe a hopeless case

But still, governments and the media are continuing to feed us with good news which bears no resemblance to the real state of the world economy. In Europe the Mediterranean countries are expanding their debt at exponential rates. Government debt to GDP of Spain, Portugal, Italy and Greece is ranging from 100% to 180%. There are futile attempt at austerity but this only leads to lower growth and higher debts. There is sadly no way out for these countries whose population is suffering terribly. The best solution would be to leave the EU and the Euro, renege on the debts and devalue currencies. But the Eurocrats are unlikely to accept this and would rather add more debt and print more money, making the situation even worse.

US debt will sink the world

The situation in the US is no better. There is hardly one economic figure being published that has anything to do with reality. Real unemployment is 23% and not 7% as published. GDP using real inflation figures has been declining for years, and real wages have declined for 40 years. The perceived increase in living standards has only been achieved with a massive increase in debt. US government debt was $1 trillion in 1980, $8 trillion in 2006 when Bernanke became Chairman of the Fed and is now $17 trillion and growing by at least one trillion a year. So Bernanke has managed to create $9 trillion of debt during his brief 7 years as Chairman of the Fed. It took 230 years from 1776 to 2006 for the US to reach $8 trillion and Bernanke has beaten that in 7 years. An astonishing achievement.  And this debt excludes unfunded government liabilities of around $220 trillion. Who in their right mind can believe that the US can get out of this hole!
Yes the US and the rest of the world will print unlimited amounts of money. But printed money is printed worthless pieces of paper and has nothing to do with wealth creation. The worldwide printing will just add to the already unsustainable debt worldwide and not create one penny of added prosperity. Instead we are likely to see a hyperinflationary depression in many countries.
For the privileged few that have financial assets to protect, physical gold stored outside the banking system is likely to be the best way to preserve wealth and purchasing power.
Egon von Greyerz

Attack on Syria to trigger fuel Apocalypse

In an anticipation of the war in Syria, the global oil market starts to shiver. A barrel of oil has recently jumped up to $115, which, according to experts, is not a limit. Some analysts give quite gloomy forecasts. They authoritatively declare that the world is standing on the verge of gasoline apocalypse.

In the Russian part of the Internet, there is a very popular forecast from U.S. expert Brandon Smith, who considers Syria a spring board for apocalypse that has been planned by the US establishment. His list of 20 looming, pretty grim events, includes those associated with the cost of oil.

According to Smith, in response to U.S. actions against Syria, Iran can close the Strait of Hormuz by sinking several cargo ships at its narrowest point. Such an act would immediately cut the volume of oil transportation by 20 percent. At the same time, the Egyptian Suez Canal will become highly dangerous to navigation too. Oil tankers will thus have to go around the Horn of Africa, increasing the length of the route by two weeks and significantly raising the cost of transportation.

The inevitable export of instability, the experts believes, will trigger a social conflict in Saudi Arabia. As a result, prices on gasoline will increase significantly. Smith predicts a rise in 75-100 percent during two or three months after any type of attack on Syria.

Sounds scary. Brandon Smith is a professional survivalist. His business is to organize local communities to create a network of mutual aid and barter across the United States. Looks very apocalyptic already. Yet, Smith gives his predictions quite accurately.

Less exalted experts agree with Smith's arguments, at least partially. Indeed, Syria does not affect the oil market directly. The peak of oil production in the country was registered about 15 years ago. Since 2011, the export of hydrocarbons has been virtually stopped - the country consumes all it makes. To crown it all, Syria is dangerously close to major oil transportation routes.

The risk for oil transportation routes explains surging oil prices on stock exchanges. Investkafe analyst Gregory Brig predicts further growth of quotations of up to 120-125 dollars per barrel. Some economists believe that the price will reach $150. However, such a rise prices is only possible if the Syrian conflict escalates into a more substantial one, with the participation of other countries in the Middle East, and if the Strait of Hormuz is eventually blocked.

"Syria is not a key player on the oil market. Rather, the market fears destabilization of the geopolitical situation in the Middle East. If Syria accounts for about 2/10 of the world's oil production, the Middle East accounts for 30 percent. Many are concerned that other countries will be involved in the conflict - Iran, Egypt and others. Therefore, prices will rise," said the analyst.

Against the background of the current situation, a rise by 75-100 percent is out of the question, of course. First and foremost, such rapid growth will kill all possible production everywhere - the world economy will not survive. Even the current growth in prices creates serious problems. The majority of experts, recalling 2008, are confident that after a short way up, the oil market will face a serious pullback. Before the crisis of 2008, a barrel of oils cost $147.3, but by the end of the year the price dropped to $35.

Nowadays, experts say, prices will most likely return to the level of one hundred dollars. Despite the version of giant oil reserves found in Syria (about 37 billion tons), which could derail the prices, it most likely goes about shale oil deposits on the shelf. In addition, the Syrian oil is classified as heavy hydrocarbons (like the Russian Urals). Who would want to arrange a small victorious war to get such dubious benefits? The game is not worth the candle, because these huge reserves would have little effect on reducing the cost of oil.

Anyway, as history shows, the actions of the United States in oil-rich regions only lead to complications. This was the case in Libya, where the richest deposit on the African continent is located. A member of Libya's Parliamentary Committee on Energy, Sliman Kajam said that the official production of black gold dropped to 150,000 barrels a day. Prior to the "democratization" of Libya, the daily production was evaluated at 1.5 - 1.7 million barrels a day.

In addition, the level of oil production in such countries as Saudi Arabia and Iraq are getting closer to their peak. In general, the current level of hydrocarbon prices adequately reflects the balance of supplies and production.

Higher oil prices will certainly bring more profit to Russia, but this money will be soaked in the blood of many Syrian citizens. According to many experts, the aggravation of the situation in Syria will make investors move their capitals from emerging markets to developed ones. The losses from the fall of the Russian stock market will outweigh benefits of the rising cost of oil.

Meanwhile, the head of the Duma Committee on Economic Policy, Igor Rudensky, told Pravda.Ru that the situation in Syria would hopefully be resolved peacefully. "Even if something happens, I do not think it will affect the global world oil market. Oil prices having been going up and down during the last five or six years. International events have their influence on the oil market, of course. If the European economy starts growing, for instance, the demand starts growing too, and oil prices rise. If the demand is falling, prices are falling too. Today, any talks about dramatic changes in oil prices are premature. Overall, the situation is quite stable. Now you can see what happens. Everyone says at the G20 summit that the world economy is slowing down, so one needs to look for a way out from the global crisis together. In my opinion, in the next few years, nothing extraordinary will happen."

Ilya Nikonov

Four Economic Records… None of Them Good

by Phoenix Capital Research

The US economy continues to be a disaster.
Last week’s jobs report was just plain awful. The media is trumpeting the fact that the unemployment percentage fell, but they forgot to mention that this is because over 500,000 people left the labor force.
Indeed, the actual number of folks who left the labor force (516,000) was a RECORD. And the number of people not in the labor force is another record at 90.47 million.
This is not because these people found jobs, nor is it because the economy is improving. It’s because the Feds don’t count you as “unemployed” if you stop looking for work.
On top of this, the labor participation rate (total number of those employed divided by those of working age) fell to 63.2%. This is the lowest level since the late ‘70s. As a segment, men have an employment ratio of 69.5%. This is the single lowest reading in the history of this metric (going back to 1948).
So that’s three economic records. None of them good.
Add to this the new record of people on food stamps and you have an economic disaster.
This is an economic disaster. It shows us point blank that the economy has not recovered and that all talk of recovery is based on either phony data or outright fraud.
The fact of the matter is that we are on the cusp of a market correction if not something more.

For more market insights and commentary, visit us at:
www.gainspainscapital.com
Best Regards
Graham Summers

War With Syria Is Imminent And It’s All About Saving The Bankrupt Fiat Money System. Get Ready For Syrian False Flag On USA!

http://FinancialSurvivalNetwork.com presents
War with Syria is imminent. It’s all about saving the bankrupt fiat money system. Andy knew it was coming. He never doubted it for a moment. Every currency in the world is plunging against the dollar. Inflation is being successfully exported. There’s all sorts of bad news on the horizon. Interest rates are headed higher and higher. But gold and silver are also climbing. Listen carefully to the intereview. It’s an important one. Major events around the world are about to kick into high gear.
REALIST NEWS – Get Ready For Syrian False Flag On USA