Are you tired of the extremes dominating the debate? Angry about hyperpartisans hijacking American politics? Well, Jon Stewart has a rally for you and me.
The Rally to Restore Sanity is slated for October 30, the weekend before Election Day, on the Washington Mall.
I'll be there. Hopefully, you'll be there to. Food for thought.
President Obama increased pressure on China to immediately revalue its currency on Thursday, devoting most of a two-hour meeting with China’s prime minister to the issue and sending the message, according to one of his top aides, that if “the Chinese don’t take actions, we have other means of protecting U.S. interests.”
But Prime Minister Wen Jiabao barely budged beyond his familiar talking points about gradual “reform” of China’s currency policy, leaving it unclear whether Mr. Obama’s message would change Beijing’s economic or political calculus.
....Democrats in Congress are threatening to pass legislation before the midterm elections that would slap huge tariffs on Chinese goods to undermine the advantages Beijing has enjoyed from a currency, the renminbi, that experts say is artificially weakened by 20 to 25 percent.
Mr. Obama’s aides said he was embracing the threat of tariffs and new trade actions against China at the World Trade Organization to gain some leverage over the Chinese, but was also trying to head off any action that would lead to a destructive trade war.
.....
While the United States has been pressing China for years to lift the strict controls on its currency, which keep Chinese exports competitive and more factory workers employed, American voters and lawmakers have only recently seized on exchange rates as a potent political issue. Mr. Obama pressed much harder on Thursday than during a visit to Beijing last year, perhaps because a Chinese commitment several months ago to allow the value of the currency to rise has resulted in a change of less than 2 percent.
This is getting interesting.
Says Ken Goldstein, economist at The Conference Board: “While the recession officially ended in June 2009, the recent pace of growth has been disappointingly slow, fueling concern that the economic recovery could fade and the U.S. could slide back into recession. However, latest data from the U.S. LEI suggest little change in economic conditions over the next few months. Expect more of the same – a weak economy with little forward momentum through 2010 and early 2011.”Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI, which began rising three months before the end of the recession, remains on a general upward trend. However, the pace has been slowing. Correspondingly, current economic conditions, as measured by The Conference Board CEI, have been essentially flat since May, after reaching a bottom in June 2009. Taken together, the composite indexes are consistent with a slowly expanding economy in the near term.”
Here's a chart of the data:
Note that while the LEIs are still increasing, the rate of increase (raise your hand if you remember "rise over run") is decreasing. This is the reason the release includes a statement that the economy will be growing slowly. Also note the same situation applies to the coincidental indicators.
Click for a larger image.
7 of the 10 indicators were positive.
Above is a chart of coincident economic indicators. What is interesting in the lower chart is that we've only seen four negative contributions from the components in the last six months and three of those were from employment. This indicates the current conditions are at worst fair.
The 7-10 year Treasury is right below important levels, while
The 20+ year Treasuries are above important levels.
As Europe’s major economies focus on belt-tightening, they are following the path of Ireland. But the once thriving nation is struggling, with no sign of a rapid turnaround in sight.From today's FT:
.....Nearly two years ago, an economic collapse forced Ireland to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.
“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”
Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.
Ireland failed to emerge from recession after its economy contracted in the second quarter, putting further pressure on the country’s government to deal with its struggling banks.The Central Statistics Office said on Thursday that gross domestic product fell by 1.2 per cent in the three months to the end of June. This compares with growth of 2.2 per cent in the first quarter.
I realize that data is anathema to political discourse now; ideology trumps all. But, in the wild hope that data (you know, facts and figures) actually matter to someone, the above facts do not bode well for austerity.
Democratic leaders in the House of Representatives will move ahead with a bill allowing the US to retaliate against China for manipulating its currency, a significant escalation of the dispute between Washington and Beijing.Sander Levin, chairman of the ways and means committee in the House of Representatives, said on Wednesday the bill would be compatible with World Trade Organisation rules.
But in a largely untested area of trade law the measure will evoke opposition from Beijing and could lead to a legal challenge in the WTO. The bill will go to committee on Friday and could be voted on by the full House as early as next week.
.....
Hours later, Wen Jiabao, the Chinese premier, told business leaders in New York that pressure on Beijing was unwarranted.
“The conditions for a major appreciation of the renminbi do not exist,” he said. If the renminbi were suddenly to rise by a large degree against the dollar, “we cannot imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs, and how many migrant workers will return to the countryside... China would suffer major social upheaval”.
China unpegged the renminbi on June 19 and allowed it to appreciate after two years of holding it constant but has intervened in the currency markets to slow its rise.
First, let's start with the blatantly obvious: China manipulates the hell out of its currency.
Secondly, the US has not acted on this for reasons unknown. Personally, I think the US is scared to play a game of international relations chicken with the Chinese. However, I can't prove this; that statement is pure conjecture.
Third: China has grown as a direct result of its manipulation. China has developed a pool of investment funds as a result of purchasing currencies on the open market to prevent a run-up in the Yuan's value. As such, they have been able to go around the word and invest in all sorts of infrastructure projects in South America and Africa to develop and extract raw materials to export to China.
Fourth: China does not want to lose its funding source. However, it is probably near the point where the fund -- if prudently managed -- has become self-funding; that is, it is so large that the return on assets is in the multi-millions of dollars on an annual basis. In essence, it operates something like an endowment fund for a large collage or university.
Fifth: while the Chinese have said they would let their currency rise, this is a promise made before major world leader get-togethers to make it look like the Chinese are doing something, only to have the Chinese not act on their promise when the confab is over. In other words, their recent promises to act on the Yuan are public relations with no policy action.
How will this end? I have no idea.
On the other side of the street, Treasuries are again getting attention. The 7-10-year part of the market is moving higher and is about to test the upward sloping trend line of the last 5 months.
Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.
Corporate debt-default rates are expected to fall to the same levels that preceded the financial crisis of September 2008, marking a swift turnaround for the fate of the most troubled U.S. companies.More signs the economy is on the mend.
The U.S. default rate should fall below 3% by year's end, according to Moody's Investors Service, a stunning drop from the 14.6% peak of November 2009 and even below the default rate of 3.1% from August 2008.The default rate measures the percentage of companies with "junk" credit ratings that failed to meet debt obligations during a trailing 12-month period. The rate's decline suggests the corporate bloodletting set off by the collapse of Lehman Brothers Holdings Inc. is at or near its end. That should bode well for the nation's unemployment rolls, which swelled after the collapse of such companies as Circuit City Stores Inc., Linens N' Things Inc., and Nortel Networks Corp. in 2008 and 2009.
"In the near term, we seem to have overcome the last wave of restructurings—faster than anticipated," said Michael Henkin, co-head of restructuring at Jefferies & Co. "Things came back pretty quickly, and the capital markets have solved a lot of the concerns that were out there on corporate defaults."
In economics, the monetary base (also base money, money base, high-powered money, reserve money, or, in the UK, narrow money) is a term relating to (but not being equivalent to) the money supply (or money stock), the amount of money in the economy. The monetary base is highly liquid money that consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks' reserves with the central bankHere is a chart of the monetary base:
"Money with zero maturity. It measures the supply of financial assets redeemable at par on demand."
Corn's rate of increase in getting steeper -- note the progressively steepening angles (A, B and C). The EMA picture is strong (D, all rising) and the MACD indicates upward momentum (E).
Cotton is also in a clear uptrend (A), accompanied with strong upside gaps (B) and a positive EMA picture (C). Also note the MACD has popped higher (D).
It can't be more straightforward: the more educated you are, the more likely you are to have a job. In every OECD country, without a single exception, a higher proportion of 25 to 64–year-olds with a tertiary level of education are employed than those with only an upper secondary degree. And likewise, those with an upper secondary qualification are generally far more likely to have a job than those with a level of education below that.
Across the OECD, some 85% of 25 to 64-year-olds with a tertiary education have a job, compared to an average of 59% of those with a secondary education or less. And the gap grows considerably wider for some countries (see our chart). With notable exceptions of Iceland and Korea, very few countries have managed to shrink this gap down.It works for gender as well. Higher levels of education also bring the employment rates of women up to that of men. Men are generally more likely to be employed than women, but the discrepancy is much bigger among people with low levels of education.
Left to its own devices, I suspect the economy would succumb to a deflationary spiral. But Ben Bernanke and the Federal Reserve know this as well: Bernanke is a scholar of Federal Reserve mistakes during the 1929-32 Great Depression. He is resolved not to make the same mistakes that were made then .... He is aiming a veritable monetary firehose at the deflationary vortex, hoping to flood it with money and so overcome the incipient deflation.Because the 2007-2009 economic downturn had much in common with the Great Depression, and because despite that fact, very few statistical series cover that period of time, in January 2009 in a series of 5 posts, I examined "Economic Indicators during the Roaring Twenties and Great Depression" in detail. Noting that the Great Depression as well as the 1938 recession, and other recessions during the 1920s had bottomed when the rate of YoY change in prices bottomed, I concluded:
....
There is at least some hope [that] ....a new Administration in Washington populated by Economic Adults may unfreeze the logjam of money supply sitting in banks and not being lent out. Certainly there is a pressing need for massive infrastructure investments that can lead to renewed bank lending and economic expansion on Main Street.
Yes there is Hope for an Obama Economic Recovery in 2009.
the indicators we have studied from the earlier Deflationary period suggest that the recession might bottom out in about Q3By April, it was reasonably clear that a wage deflationary spiral was not going to happen, and that gave me confidence enough to write:
For purposes of this discussion, I am going to assume that the optimistic scenario turns out to be the correct one: viz., that the YoY inflation rate will bottom in about July 2009 and that will mark the end of the recession and the beginning point of any recovery.By early May 2009 we had had both a bottom in retail sales, stabilization in the housing market, and the signs of significant decline in both initial jobless claims and monthly payroll losses. On May 07, I wrote:
This week's decline increases the likelihood that the recession is very close to bottoming to more than 50%.Four days later, referring primarily to the Leading Economic Indicators, which were almost all showing signs of turning upward, Bonddad and I jointly wrote
The continuing weekly decline in weekly jobless claims is not the only indication that the recession may be close to bottoming out.... Last Friday the ISM Manufacturing Index for April was released. It was all but ignored in the economic blogosphere.... In summary, the NAPM Manufacturing index's reading for April is consistent with the recession bottoming out, and a recovery beginning almost immediately.....
.... the NBER may ultimately date the end of this recession from June or July of this year.
there are plenty of reasons, those listed above not being in any way exhaustive, that people like us are saying that the economic situation looks like it is getting ready to improve.By the end of August we were both confident, and correct, enough to write bluntly that This Recession is Over.
If you're like the rest of us, and you can handle the truth about our economy, here's a quick summary:while another in the same month of July derisively claimed that Green Shoots are turning into Brown Weeds:
....-"...the economy is leaps and bounds away from anything remotely resembling a recovery."
"Some Green Shoots supporters have declared that the bottom is in. They point towards various short-term trends, and if you don't look too close, it appears to support their cause.... If you look hard enough you can find Green Shoots, but do they actually exist in the real world? Sadly, no..As late as this July, latching onto a column written by Calculated Risk about the NBER's recession dating (which I also criticized, also correctly as it turned out), one of them claimed:
if another recession starts this year, it will almost certainly be dated as a continuation of the "great recession" that started in 2007. If so, I'll need more blue ink to shade all my graphs ...Yesterday the NBER settled that debate. They confirmed that the Pied Pipers of Doom were wrong. At the very time they were writing the above bombasts, the economy had begun to recover.
IMHO, more likely than not, these are the realities of our economy heading into the last four months of the 2010 election cycle.
In short, there can't be a double-dip recession if the Great Recession never ended, in the first place.
