The Bush administration continues to report job growth numbers typically around 200,000 per month and tout an unemployment rate in the vicinity of 5%.

The truth is the job numbers are mostly made up out of whole cloth by the “birth-death” model and the unemployment rate ignores a drastic shrinkage in the workforce participation rate as people who cannot find jobs finally stop looking.

Every year, the BLS quietly resets its numbers to “wash-out” the spurious adjustments that they put in during the year. If they didn’t do this, total employment numbers would start to become absurd quite quickly. Even economists would realise something was wrong. Fortunately they do release these adjustments, which this year reveal that over the last five years, a measly 1.04 million net new private sector jobs have been created, way short of the 7 million needed to keep up with population growth. (Note: Data retrieved from BLS total private employment table, go to the site and use the “Most Frequently Requested”)

The labor force participation rate has fallen every year since 2000 except 2005 when it was essentially flat.

Looking into the detail, the picture is worse. For example, manufacturing lost 2.9 million jobs and of course many of the new jobs are related to the housing bubble and have already begun to disappear.

“From Inman News: the January foreclosure statistics. “About 103,540 properties nationwide entered some stage of foreclosure in January, a 27 percent increase from the previous month and a 45 percent increase from January 2005, according to RealtyTrac. ‘This is the first time since we introduced the report in January of 2005 that we’ve seen back-to-back months with increases of more than 20 percent,’ said James J. Saccacio.”

Many writers are picking up on the speculators as the driving force behind the housing bubble. Financial writers often do this, blaming avaricious speculators for price movements, a recent example being the rise in energy prices. But you have to look to the fundamental demand, without which speculators cannot survive. I believe the housing bubble is more about fear than avarice. In the case of many buyers, the fear of being “left behind”, of being “locked out” of home ownership. Otherwise rational people seem to have bought in to the meme that says owning is always good. Certainly there are also speculators who prey on these folks, who seem to have been willing to pay nonsensical prices because of their fear. But without the primal fear, the speculation would not have been successful.

“Day-trading is great because everyone is equal, even housewives,” said Mrs. Yamamoto, an energetic woman in her late 30’s who declined to reveal her exact age or to document her trading profits. “Success or failure depends entirely on how clever you are, and nothing else.”

In Japan, Day-Trading Like It’s 1999

“Ekaterina Glover, 23, a Phoenix resident, said she has been reading books about real estate investing and realized that many mentioned Phoenix. She dreams of getting rich in real estate. “I do not have a stable job history or a credit history,” she said. “But if you’re enthusiastic and happy to learn, you can make it.”"

Housing ‘fix, flip’ crowd fired up

Words fail me.

Sacramento currently has about an 8.5 month inventory on MLS.

D.R. Horton is cutting new home prices by 22.5% to over 30% to “move ‘em out”. Hope you’re not trying to flip one you bought at the old price.

Mish: Horton slashes prices in Sacramento