- by New Deal democrat
And so, at long last, in the last 10 days Barack Obama, who soared into office on the most brilliant intellect since John Quincy Adams and the most inspiring rhetoric since Ronald Reagan, has revealed himself as having the compassion of Herbert Hoover and the negotiating skills of Jimmy Carter. His "deficit commission" proposes *lowering* the tax rates on corporations and the wealthy, leaves Wall Street completely unscathed, and places almost all of the burden of balancing the budget on the backs of middle class households earning between $50,000 and $120,000 a year.
Tax rate simplification was tried in 1986. It lasted less than 6 years, by the end of which it was once again riddled with exemptions and loopholes. Only those who do not remember their history can believe it is worthwhile to repeat it. By turning Social Security into a welfare program for the lower 40%, paid for by the remaining 60%, the panel has ensured that there will be a powerful and growing constituency favoring its further destruction in 10 or 20 years. All this over a shortfall that, as Bruce Webb tirelessly points out, can be completely covered by a 1/2% increase in payroll taxes.
The rancid icing on the poison cake is the White House's capitulation on the issue of making the Bush tax cuts for the wealthy - the single biggest source of the persistent budget deficit and burgeoning national debt - permanent.
I was going to post an economic outlook yesterday, but in the midst of the biggest government inflicted catastrophe on the middle class in over 75 years, it seemed hardly worthwhile.
Here is this week's high frequency data:
The price of a barrel of Oil held steady at about $86 a barrel. If Oil goes over $90 and stays there, we will probably go right back down into a recession in a few months. Gas at the pump remained stable at $2.82 a gallon. Gasoline usage was exactly the same as one year ago, at 9.015. Gasoline stocks are down considerably, to no more than 5% above their normal range for this time of year.
Meanwhile the Mortgage Bankers' Association reported that its seasonally adjusted Purchase Index increased another 5.5% last week, the third straight week of increase. Purchase applications have stabilized generally in the last few months at a level about 20% lower than 2009. Meanwhile, the Refinance Index increased 6.0% from the previous week. Refinancing is still proceeding at a generally high rate.
The ICSC reported same store sales for the week ending November 6 increased 1.3% week over week, and also increased 3.4% YoY, the best comparison in over a month. Shoppertrak did not report for the week, and did report that sales were up only 1.6% YoY for the month of October. October's retail sales report, due Monday morning, will be the most important statistic next week.
The BLS reported 435,000 new claims, the lowest in over 2 years. The 4 week average has finally moved below 450,000. Next week will see if there is a new trend towards lower claims out of the 12 month range or not, the second big statistic of the week.
Railfax for the first time in a long time showed outright decline compared with last year's loads for all sectors. Some of this may be due to retailers ordering and receiving holiday goods early, after last year some were left without merchandise due to shipping delays, but we will see.
The American Staffing Association reported that for the week ending November 2, temporary and contract employment slipped 0.26 back to 100.0. Seasonality, in which temp help stabilizes and then declines in late December is probably the dominant factor at the moment.
M1 increased .9% last week, and was up 0.7% month over month, and up 5.7% YoY, hence “real M1” is up 4.6%. M2 declined .1% last week, but increased +0.6% month over month, and increased 3.3% YoY, so “real M2” is up 2.2%.
Weekly BAA commercial bond rates increased 0.04% last week to 5.80%. This compares with yields on 10 year bonds up +.13%. Thus there is no sign of buyers seeing increased default risk in B rated corporate bonds.
The Daily Treasury Statement showed $50.9 B in receipts vs. $47.4 B a year ago, a gain of about 7.2% for the first 7 days of November. For the last 20 days, receipts are up $125.2 B vs. $118.7 B a year ago, a gain of about 5.5%. Seasonality is beginning to be felt in the early November numbers.
In the short term, if Oil and a new Euro crisis do not again threaten the recovery (shades of May), the recovery still appears on track.
In the longer term, if G^d is still willing to show mercy on the country, then just as Lyndon Johnson - whose domestic legislative record of the voting rights act, civil rights act, immigration reform, and Medicare and Medicaid could not withstand the divisions of his Vietnam escalation - chose not to seek re-election in 1968, so Barack Obama may voluntarily step aside in 2012.