Goldman’s Hatzius sees Operation Twist QE3 due to weak jobs number

The jobs numbers in the US were weak. There was no change in non-farm payrolls. Unemployment was unchanged from July at 9.1%. Underemployment was 16.2%. Total revisions to previous months’ data were –58,000, meaning the number today was equivalent to -58K print. The numbers sparked a selloff in stocks and crude oil, but caused the Swiss Franc and Treasuries to rally.

These are very weak numbers. Eddy Elfenbein gives us the longer-term perspective: over the last seven years, the labour force has grow by 6.03 million and there are only 54,000 new jobs. Moreover, the unemployment rate would be 11.4% if the labour force was as big as it was when President Obama took office.

With this in mind, take a look at what Jan Hatzius has to say to Bloomberg News. He sees QE3 coming in the form of operation twist. This is an asset swap of short-paper for long-dated paper first attempted in 1961 to get long rates to fall even more. I see this as toxic for banks and savers. However, Hatzius says it could happen by September already.

Gee, I wonder what Rick Perry will say. We already know what Rick Santelli thinks.

Note that Julia Coronado at BNP Paribas was saying 9,000 for NFP before we printed the goose egg. So she is seeing weakness accurately. She sees a GDP contraction for Q4 and joins David Rosenberg of Gluskin Sheff in seeing recession in 2011.

Also note that Harvard’s Martin Feldstein, who is on the recession dating committee, has also said the US economy may already be in recession.