Ugly Ahead - Hold On To Your Seats

Here are a few things you need to know about today. The employment numbers were resoundingly stated as being "good" by every source I read, up 117,000, which is better than expected. Problem is we need roughly twice that many new jobs to start seriously reducing unemployment.

But wait, you say, unemployment went down today from 9.2% to 9.1%, so we are making improvements, right? And here my friends is a reason to understand the figures. The "official" unemployment numbers can go down a number of ways, even aside from government manipulation. One way is for enough jobs to be created to lower the ranks of unemployed - and that did not happen. Another is for a lot of people to give up looking so they are no longer officially considered among the unemployed - and that is what happened. Yep, the number of people seeking jobs decreased over 150,000. In other words, 150,000+ simply gave up looking, which I take as a sign of how bad things are out there.

http://www.foxnews.com/politics/2011/08/05/when-good-news-is-bad-unemployment-rate-drops-as-workers-bolt-labor-force/

So the "good" numbers are simply better than expected and not so good. Just be prepared.

I have triple A (as in the auto related company) and the U.S. government (as in the rating) does not!

Well, S&P just downgraded the U.S. credit rating below AAA. Now folks are saying there should not be too much market reaction:

http://www.reuters.com/article/2011/08/06/us-usa-debt-downgrade-view-idUSTRE77504J20110806

But the first downgrade in, well, forever, is no big deal, really? S&P also says there may be further cuts if we do not do the deficit reduction that we are anticipating. I have to think this is a big deal, even if not unexpected as S&P has been calling for this for a while.

The postal service losing $3 billion and being on the verge of bankruptcy also cannot help this situation. It has been coming for a while, which has me questioning why the postal union is running radios ads on how the service is self-sufficient and not dependent on taxpayer dollars, but what do I know.

http://content.usatoday.com/communities/ondeadline/post/2011/08/postal-service-warns-of-default/1?csp=34news

Billionaires in the News

Now I could say all is terrible but Mr. 3 in the Fortune 100 list is having a good day. Berkshire Hathaway just announced profits up like 74%, so Buffet is having a pretty good day.

http://www.google.com/hostednews/ap/article/ALeqM5hRxPM2hW1icxgY27a45VveGoGUgQ?docId=938006f20797466e944d2c9206e06b83

But Mr. 1, a Mr. Slim from Mexico who has had the number 1 rank for two years in a row, is having a smidge of issues. I read yesterday that this past week he has lost $8 billion in his portfolio. Ouch!! I once lost $8 billion, and though it was not in nearly that short of a period of time, it really hurt. Now Slim only has a little over $63 billion left to survive on, and my heart really goes out to the guy. What can he do, where will he eat?

Other than this, everything is fine. Everything in Europe will be fine next week. Citizens are not still protesting in the streets in Greece and they are not quickly taking all their money out of the banks. Spain is fine. Italy just swallowed the pill and will be fine. The PIIGS are back in their safe pens and no problems exist. And before you act on this paragraph, note that not a lick of it is true.

Okay, I wish that were true, but as I said yesterday, PIIGS get slaughtered. It is just a matter of time. And this is despite whatever spending reductions the ECU requires. Did I mention that reductions in deficit spending hurt the GDP and worsen recessions? A worsened GDP is all the EU needs right now, but I agree deficits need to come down. Not an easy choice.

Disclosures: I do not own any equities mentioned in this piece and do not intend to buy any in the next 72 hours.