On the mistakes in the recent CSO data release, see P. Raghavan in the Indian Express.

By the time 3G telephony came about, India was well into the telecom revolution. By December 2007, there
were 190 3G networks in 40 countries and 154 HSDPA networks in 71 countries, but none in India. We’re
now finally getting on with it, and will probably be the last place in the world with 3G telephony.

And there are the failures in organising the Commonwealth Games.

It is enough to make a man worried.

At 8:30 AM EDT the Employment Situation report for August will be announced, and the consensus for non-farm payrolls is an decrease of 70,000 jobs compared to a loss of 131,000 in July, the consensus for private payrolls is an increase of 40,000 jobs  compared to a gain of 71,000 in July, the consensus for the unemployment rate is that it will increase by 0.1% to 9.6%, the consensus average hourly earnings rate is expected to increase 0.1%, and the consensus for the average workweek is 34.2 hours.

At 10:00 AM EDT, the ISM non-manufacturing index for August will be released.  The consensus estimate is that it decreased 1.3 points last month to a value of 53.0, but will continue to signal economic growth as it remains well above the mid-point of 50.

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California IOUs are beginning to infringe on the Federal Reserve’s exclusive monopoly regarding legal tender fiat currency. On 23 August 2010 California bill A.B 1506 passed 9-0 and contains a provision that “a state agency shall accept from a person or entity a registered warrant issued by the Controller that is endorsed by that payee , at full face value”. This failing State is now one step closer to the financial abyss event horizon and the gravitational pull of economic law continues exerting tremendous pressure.

UNITED STATES CONSTITUTIONAL MONETARY SYSTEM

The language of the Constitution is both exceedingly simple yet extremely profound in its consequences. In Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1, silver and gold coin are adopted as the exclusive money and currency of the United States. The term ‘dollar’ is written twice in the Constitution in Article I, Section 9 and in the Seventh Amendment. But what is a dollar?

Constitutionally, a dollar is a silver coin containing 371-1/4 grains of silver. Thus, the legal value of silver coinage must be proportional to the weight of silver contained and any gold coinage must be proportional to the exchange value between silver and gold based on the exchange rate in the free market.

Despite these clear Constitutional prescriptions the commonly accepted instrument in the United States is the Federal Reserve Note. The market share for Federal Reserve Note coupons, emblazoned with images of sacrosanct sociopaths like Abraham Lincoln or Alexander Hamilton, is increased because they are given preferential yet unconstitutional treatment under 31 USC 5,101-5,118. Now California appears to be attempting to infringe on this hallowed monopoly.

LEGAL TENDER FIAT CURRENCY

Fiat currency is a currency issued by a State which is neither legally convertible to any other thing nor fixed in value in terms of any objective standard such as gold or silver. Thus, fiat currency is without intrinsic value.

Because fiat currency is usually just some form of little colored coupon with no intrinsic value the State often has to resort to violence to increase liquidity. These immoral market interferences to enhance the little colored coupon’s market share generally consist of four prongs: (1) making the currency the unit for payment of taxes and fees for public expenditures, (2) by declaring the little colored coupons ‘legal tender for all debts, public and private’, (3) imposing taxes on competing currencies and (4) by outlawing contracts payable in any other form of money or currency, especially currency that does not require force to be accepted such as commodity money like gold or silver.

CALIFORNIA IOUs – A THREAT TO FEDERAL RESERVE NOTE COUPONS

By issuing IOUs and passing a bill requiring state agencies to accept them at full face value, California will be infringing on the Federal Reserve’s Congressionally granted monopoly. Like the Kelantan State in Malaysia that is encouraging the use of gold and silver coins in ordinary daily transactions this seemingly small action actually poses a significant threat to the Federal Reserve Note’s status as the world reserve currency.

Why? Because the next few steps California could easily take is to either declare the IOUs legal tender for all debts public and private or impose taxes for using FRN$s in California or completely outlaw the use of FRN$s in California.

Given that California GDP is the largest of any US State and the eighth largest economy in the world, between Italy with $1.76T in debt and Russia, it seems fairly perplexing that they are worried about a measly $19B budget deficit when the United States budget deficit is about $1,500B. In other words, California’s budget deficit is 1.267% of the United States’ while its GDP is about 13%.

How could California access its ‘credit worthiness’ when compared with other sovereigns like Italy with its nearly $2T in debt? Slap a bear on its IOUs, call it a California dollar while making it redeemable in silver, pass a bill to make California dollars legal tender and then impose taxes or prohibit the use of Federal Reserve Notes in California. Indeed, in conjunction with H.R. 4248 The Free Competition In Currency Act every State should begin issuing their own currency.

IRS PROTECTION OF FEDERAL RESERVE’S MONOPOLY

The Federal Reserve does not want any competition to its little colored coupons in the currency market. Want to know why gold rises at most only about 30% per year? Its the gold price suppression scheme as uncovered by GATA in conjunction with IRS Topic 409 where the net capital gain of collectibles, such as American Eagle gold coins which are legal tender under 31 USC 5,103, are taxed at a maximum rate of 28%.

But either way California is being pulled into a situation it cannot recover from. How will California fund its chronic budget deficit and debt when can neither be surreptitiously bailed out by the federal government via Citigroup nor print its own California dollars?

CONCLUSION

The Federal Reserve’s monopoly over the currency market is increasingly facing overt and covert threats. The more credible the threats the less demand for its little colored coupons. But the Federal Reserve Note is merely the King Ghost of currency illusions and has no substance compared to the Ancient Metal of Kings, gold, or Tears of the Moon, silver. Countless fiat currencies have come and gone through the ages while these elements have always been worth something. The Great Credit Contraction continues and even if there is a California dollar created the smart holders of capital will bypass it and move directly into the monetary metals.

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The monthly Chain Store Sales report will be released today.  This report on sales in chain stores gives a look at the health of stores that make up about 10% of all retail sales.

The Monster Employment Index for August was released today, and the index moved down 2 points to a value of 136, which was an increase of 12% from last year.

At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report.  The consensus is that there were 470,000 new jobless claims last week, which would would be an slight decrease in claims from last week’s number.

Also at 8:30 AM EDT, the Productivity and Costs report for the second quarter of 2010 will be released.  The consensus is that non-farm productivity was decreased by 1.9% in the last quarter and labor unit costs increased 1.2%.

At 9:00 AM EDT, Ben Bernanke and Sheila Bair will testify before the Financial Crisis Inquiry Commission.

At 10:00 AM EDT, the Factory Orders report will be released.  The consensus is for an decrease of 0.5% in orders in June, after a drop of 1.4% in May.

Also at 10:00 AM EDT,the value of the pending home sales index for July will be announced.

At 10:30 AM EDT, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.

At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.

Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.

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As a chronic skeptic, I’m leery of any inside-the-beltway plans to “privatize” anything.  Without explicitly enumerating definitions, terms and their meanings, this can mean government control over how one allocates capital in the “private” economy.

At that point, it’s no longer the “private” economy and individuals are robbed of choices.  Capital is directed into government-approved – and possibly risky – channels.  It’s a de jure way of bailing out certain segments of the economy with fewer middle men.

Let’s start with this axiom: The present system is unsustainable.  Presently, seniors are not being paid and the people of my generation will definitely not be paid.  That seniors are being paid is a ruse.  They’re being paid off in nominal terms, but not real terms.  By that, I mean the government is debasing the currency in order to extinguish its liabilities to seniors.  Seniors are being paid in devalued dollars and savings in real terms having been, and are, being wiped out.

The only realistic plan I can think of that would tide people over, allowing the government to meet its obligations to seniors in real terms, while allowing my generation and everybody to escape the certain collapse of the dollar – in which case everybody gets wiped out – is to compel the government to liquidate PP&E in order to meet its obligations.

In so doing, the Treasury would have to enter the marketplace to buy dollars (i.e. the inverse of the government spending – or selling – dollars) in order to keep its promises made to seniors in real terms.  That’s the only workable position, and it’s one that Congresswoman Dina Titus doesn’t take.

If people wish to allocate capital into a futures account instead of turning it over to a greedy congress that’s all too willing to waste it on non-income generating boondoggles, why not let them?

The figures for motor vehicle sales in August will be released today.  The consensus estimate is that 8.7 million autos were sold last month, which would be the same number of autos sold in July.

The Mortgage Bankers’ Association purchase index was released at 7:00 AM EDT, and there was a week to week increase of 1.8% in the Purchase Index and a week to week increase of 2.8% in the Refinance Index due to low interest rates.

The Challenger Job-Cut Report was released at 7:30 AM EDT, and it showed that there were 34,768 layoffs in August, which is about 7,000 less than the number of layoffs that were reported in July.

At 8:15 AM EDT, the ADP Employment Report will be released.  Investors will be watching this number to get advance notice on the state of the job market in advance of the government’s report on Friday.

At 10:00 AM EDT, the Construction Spending report for July will be released, and the consensus is that there will a decline of 0.6% in spending compared to the previous month, following a surprise increase of 0.1 percent in June.

Also at 10:00 AM EDT, the ISM Manufacturing Index for August will be released.  The consensus is that the index value will be 53.0, which would be an decrease of 2.5 points from July, but would be the thirteenth month of expansion in a row.

At 10:30 AM EDT, the weekly Energy Information Administration Petroleum Status Report will be released, giving investors an update on oil inventories in the United States.

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Per Reuters:

The Muslim center planned near the site of the World Trade Center attack could qualify for tax-free financing, a spokesman for City Comptroller John Liu said on Friday, and Liu is willing to consider approving the public subsidy.

There’s some weasel wording in there, so let’s unpack it.

The issue isn’t “tax-exempt financing” per se. All financing (and everything else!) should be tax-exempt.

Nor is “tax-exempt financing” by definition a “subsidy.” Not taking money from someone isn’t the same thing as giving money to someone.

But this actually is a subsidy — it’s one of those “public-private partnership” things, where a quasi-governmental organization (a “local development corporation”) is allowed to issue bonds (the interest on which is tax-exempt to the bondholder, hence the “tax-exempt financing” language) to complete the project. If the project goes under, the taxpayer takes the hit for payment on the bonds.

Note to Park51/Cordoba House’s principals: You shouldn’t even be thinking about trying this.

A majority of the populace appears to have already swallowed the “Ground Zero Mosque” demagoguery hook, line and sinker and are hell-bent on stopping you from building your cultural center.

Of the minority standing up for your property rights and religious freedoms, a significant portion of us are civil (or uncivil, as the case may be) libertarians who are standing up only for your property rights and religious freedom.

Most of us aren’t Muslims or particularly enamored of Islam.

Most of us don’t really give a tinker’s damn whether the thing gets built or not — we’re just standing up for your right to build it, if you choose to, on your own property and with your own money.

It’s a fragile coalition centered around rights versus might, freedom versus compulsion, tolerance versus suppression.

As soon as you start claiming a “right” to stick your hand in taxpayers’ wallets for a bailout if your project goes south on you, that coalition disintegrates.

So don’t do it.

At 7:45 AM EDT, the weekly ICSC-Goldman Store Sales report will be released, giving an update on the health of the consumer through this analysis of retail sales.

At 8:55 AM EDT, the weekly Redbook report will be released, giving us more information about consumer spending.

At 9:00 AM EDT, the monthly S&P/Case-Shiller home price index report will be released.  Given that most economists don’t expect the overall U.S. economy to improve until housing prices end their decline, the market will be watching this number closely.

At 9:45 AM EDT, the Chicago PMI Index for August will be announced.  The consensus index value is 56, which is 6.3 points lower than June, but is still well above the break-even level at 50.

At 10:00 AM EDT, the monthly report on Consumer Confidence for August will be released.  The consensus index level is 50.3, which would be a 0.6 point increase over July.

Also at 10:00 AM EDT, the State Street Investor Confidence Index will be released, which looks at changes in the amount of equities held in the portfolios of institutional investors.

At 2:00 PM EDT, the Federal Open Market Committee will release its minutes for the meeting held on August 10, 2010.  This report contains quarterly economic forecasts from the Federal Reserve and policy changes that were discussed.

At 3:00 PM EDT, the Farm Prices report for August will be released, giving investors and economists an indication of the direction of food prices in the coming months.

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Gary Becker has recently written an interesting article on the Becker-Posner blog about polls suggesting that the majority of parents in the United States are not confident that their children will be better off economically than they are. He suggests that the best way to counter such pessimism is to promote faster economic growth.

The article made me feel slightly uneasy because I wrote something a few months ago suggesting that the poll results actually conflict with the view that Americans are pessimistic about the future for their children. Have I mis-read the poll results? How much have the poll results changed over the last year or so?

Scott Winship has recently considered the evidence of a variety of polls on his blog: here and here. In brief, the polls indicate that the proportion of Americans who think that their children will have better standards of living than themselves consistently exceeds the proportion who think their children will have worse standards of living. The margin tends to narrow during recessions but, even this year, the polls suggest that optimism is no lower than in the mid-1990s (see Pew Research Center poll results here).

Rather than trying to explain why Americans have become more pessimistic perhaps researchers should be trying to explain why Americans are still so optimistic.