Townhall Finance
QE Has Failed, Long Live QE
By John Ransom
Sep 02, 2013
The market got more bad
news that’s good news- but not good in the sense that it actually
helps you, me or anyone else- when the new jobs reports came out on
Friday.
This "good news is bad
news is good news" thing is getting tiresome. It's part of what
our friend Mike Shedlock calls the Obamcare Effect.
(Editor's Note: In honor of
Labor Day, I'm not laboring. Please enjoy this timely column from
last month)
First the barely good news.
The report showed that
despite the dire warnings from federal bureaucrats, politicians and K
Street lobbyists, the jobs market didn’t fall apart because
Republicans forced the government to spend less than it planned.
“U.S. job growth
accelerated in June thanks to a big jump in hospitality and service
workers,” said CNBC, “according to a report that is likely to
trigger more debate about how aggressively the Federal Reserve will
begin pulling back on monetary easing. Unemployment steadied at 7.6
percent for the month, as nonfarm payrolls grew by 195,000, according
to a closely watched Labor Department report Friday. Economists
expected 165,000 more jobs and a decline in the unemployment rate to
7.5 percent.”
Unemployment “steadied”?
Well not quite. It actually went up, way up, as we’ll see below.
The bad news for the market
is that as jobs growth expands, it’s more likely that the Federal
Reserve will stop pumping an estimated $85 billion in new money into
the stocks and commodities markets, commonly known as Quantitative
Easing.
That means that markets
will start to have to trade on it’s own merits. Not every trader
will get a ribbon now. And that means Wall Street will have to figure
out a different way to rig the game.
The real bad news is that
job growth is being driven by policies coming from Washington, mostly
Obamacare.
And of course, like
anything else D.C.-related, the Democrat policies have it exactly
backwards.
While it’s true that job
growth was robust, it came from the growth of PART-TIME jobs, which
are the only kind available. On a net basis, the economy lost 326,000
fulltime jobs.
Obamacare changes the
definition of full time employment to 30 hour a week from 32 hours
and requires companies over a certain size to purchase health
benefits for all fulltime employees. As a result, companies are doing
what we all knew they would: They are cutting fulltime employment and
replacing it with part-time help.
There was some hope this
phenomena, which Shedlock calls the Obamacare Effect, was mostly over
in the employment arena.
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article and more, go to Townhall Finance
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