In November, the Labor Department reported the addition of 120,000 jobs to the economy. This figure consisted of 140,000 new jobs in the private sector, offset by a loss of 20,000 in the public sector. Notably, the unemployment rate dropped to 8.6 percent, marking its lowest point since March 2009.
At first glance, the job market appears to be on the upswing. However, a deeper examination reveals a more complex reality.
For example, the November job growth of 120,000 does not keep pace with the monthly population increase of about 200,000. To make a meaningful dent in the unemployment rate, job creation must surpass population growth and the expanding labor force. Even with a shortfall of roughly 80,000 jobs last month, the unemployment rate still saw a decrease.
How is this possible?
The answer lies in a decline in the number of people actively seeking work, which decreased by 315,000. Additionally, 487,000 more individuals exited the labor force entirely. According to the Bureau of Labor Statistics, those who haven’t searched for work in the past four weeks are not classified as unemployed. While this accounting method currently lowers the unemployment rate, it may eventually raise it again when these individuals decide to re-enter the job market.
Despite this, we should not be overly critical of the jobs report. Given the financial turmoil and instances of fraud that continue to plague the economy, the results could have been much worse.
More Politically Connected Fraud
A notable incident occurred in the futures market on Halloween when it was revealed that MF Global, a futures brokerage, had mysteriously lost $1.2 billion of customer funds.
It appears that MF Global misappropriated money from customer accounts, mixing it with company funds, and then lost $6.3 billion on misguided bets involving European bonds. Following this financial disaster, the company filed for bankruptcy, and its CEO, Jon Corzine—a former Goldman Sachs leader, ex-Governor of New Jersey, former U.S. Senator, and significant Obama campaign donor—simply disappeared.
The headline on CNBC.com asked, “Where in the World Is Jon Corzine?”
Corzine will soon make a return, albeit an unwelcome one, to Congress. The House Agriculture Committee has summoned him to testify regarding the collapse of his brokerage firm, specifically focusing on the $1.2 billion in missing customer funds.
Regrettably, with a month having passed since the disappearance of these assets, there are strong doubts about their recovery. The repercussions of this incident are significantly affecting farmers and futures traders, exposing the dark side of a politically connected financial firm engaging in large-scale fraud.
The Metamorphosis of Jon Corzine
Farmers and ranchers typically use futures markets to secure sales prices for their agricultural products, be it grain, cattle, or hogs. By locking in prices ahead of time, they can better manage their operations. This practice has been a staple in farming for over a century, allowing producers to mitigate risks associated with fluctuating market prices and unpredictable factors, such as weather conditions.
However, due to Corzine’s mismanagement, farmers have new worries beyond just crop yields and feed costs.
“Mike Mouw, co-owner of Mouw’s Feed and Grain Inc. in southwestern Minnesota, stated that his business depends on the futures markets for both purchasing grain from farmers and selling feed to hog producers,” reported the AP. “This allowed us to plan for two or three years ahead. Now, however, Mouw estimates he’s lost about $250,000.”
“Dean Tofteland, who cultivates corn, soybeans, and raises pigs near Luverne in southwestern Minnesota, has approximately $200,000 tied up with MF Global.”
“It feels like having your house burn down without insurance,” Tofteland lamented.
“Grain farmer and rancher Marty Klinker from Fairfield, Montana, has lost around $336,000.”
In addition to the farmers, futures investors and speculators have also been victims of this financial debacle.
“Highridge Futures Fund LP, a customer of MF Global, reported that its $50 million account is ‘missing,’” shared Bloomberg.
“Queen’s Quay Avante Ltd., which established a cash account of $7 million at MF Global on September 21, has yet to receive any funds.”
The instances outlined above add up to approximately $57.8 million, or about 4.8 percent of the overall $1.2 billion in lost funds. It’s likely that the other 95 percent of the missing money is equally catastrophic for those affected.
“I often say that words are significant; actions define reality,” said Jon Corzine when he served as Senator.
Clearly, the gap between Corzine’s rhetoric and his actions highlights a troubling transformation—from a Senator who could be perceived as a mere charlatan to the head of MF Global, where his decisions have led to widespread destruction.
Sincerely,
MN Gordon
for Economic Prism
Return from The Metamorphosis of Jon Corzine to Economic Prism
