Perspectives on the global economic meltdown (Jan 26 2010)

shyam · Post by **shyam** » 17 Mar 2010 08:22

Peter Schiff blasts Paul Grugman and says that his Nobel Prize must be taken back.

http://www.youtube.com/watch?v=11WlFlO_mDg&feature=sub

Hari Seldon · Post by **Hari Seldon** » 17 Mar 2010 09:47

Calibrating differences between China and Japan’s bubble blow-off top

Slowly but surely voices are getting louder speculating about cheena's bubbliness only. As always, hard to say anything about cheena with any confidence in the best of times. And these are certainly anything but the best of times.

Hari Seldon · Post by **Hari Seldon** » 17 Mar 2010 10:00

Enfant terible Sri Andy Xie at it again:
Our Next Economic Plague: Japan Disease
Its about the longer term megatrends in demographics intersecting with the khanomic trends of indebtedness only, written in Andy's rhetorical style. Here's the subtitle.

Growing old is hard, but watching formerly vibrant economies choke on debt and wither away is downright ugly.

In all the rehtorical flourish though, some important points do get made...sample this, the opening para pair...

Japan's nominal GDP fell 6 percent to 475 trillion yen last year, while its real GDP declined 5 percent. Meanwhile, nominal GDP in the United States decreased 1.3 percent to US$ 14.2 trillion and real GDP fell 2.4 percent.

If you travel across Japan and the United States, you get the impression that America is in much worse shape: Americans cannot stop screaming about their woes, while the Japanese face economic sufferings quietly. Maybe this is due to cultural differences. Regardless, Japan is in dire shape. Its nominal GDP is now lower than it was in 1992 when the nation's property prices first began to decline.

The old fable about chickens coming home to roost in a vicious cycle gets another data point in its favor. See, debt inflates gdp during happy times and depresses them during bad times (like now) further raising debt/gdp ratios and putting further pressure on debt servicing burdens just when the khanomies concerned could've used some help.

Japan's status is frightening because its problems will spread to all of us in the future. Everyone knows what it's like to grow old. And history is full of examples of empires that grow old, wither and die. For modern economies, though, this is a new concept.

There are clearly factors behind the aging of an economy. All of these factors are now at work in Japan. And looking at Japan today, it's clear that it's no fun for an economy to grow old.

People can postpone aging with expensive cosmetic products, Botox and, if you are really desperate and rich, surgery. But are there ways to postpone the aging of an economy, or avoid aging completely, sort of like Maggie Cheung?

Like Bhupen da sings E kemono Rango Jadu...E kemono Rango...

Singha · Post by **Singha** » 17 Mar 2010 11:22

but doesnt japan still have a high domestic savings rate -vs- sher khan who is up from 0% in boom era to around 10% now ?

Hari Seldon · Post by **Hari Seldon** » 17 Mar 2010 11:27

Singha wrote:but doesnt japan still have a high domestic savings rate -vs- sher khan who is up from 0% in boom era to around 10% now ?

Japan's savings rate is close to being depleted, finally. Massive savings --> massive demand for jap gubmint bonds --> low nay zero interest rates --> carry trade in Jap yen etc allowed the BoJ to extend and pretend all these yrs, keep zombie banks alive and the like. IMHO, of course. The problem can not be kept under wraps for much longer.

shyam · Post by **shyam** » 17 Mar 2010 13:20

Following is a psy-ops article. However it has an important datapoint that will help us locate where India stands, and what causes takleef for EU.
India's Disjointed Prosperity

Let no one forget that India is home to the fourth largest number of billionaires and to 60 million people with a higher living standard than France or Britain — and commerce across the globe is chasing their money.

Population of UK: 62 Million (2010 estimate)
Population of France: 65 Million (2010 estimate)

Neshant · Post by **Neshant** » 17 Mar 2010 13:35

how are living standards defined?

Hari Seldon · Post by **Hari Seldon** » 17 Mar 2010 15:53

This, folks is potentially huge.

I've been tom-tomming the implications of a wider acceptance of a 'Beijing consensus' (i.e. naked mercantilism combined with unapologetic ripostes, brazen quid pro quos etc) in geopolity and seems like relatively less status-quoist Brazil is taking the lead here.

Brazil to Break Patents on U.S. Films, Books, Drugs

March 15 (Bloomberg) -- Brazil will seek to break intellectual property rights on U.S.-made prescription drugs, music, books, software and movies in a bid to force the U.S. government to end cotton subsidies that violate global trade rules.

Brazil’s government submitted a list of products that may have royalties, copyrights and patents suspended as part of $829 million in retaliatory sanctions authorized by the World Trade Organization, according to a statement published today in the country’s official gazette.

“These measures don’t change policies or our commitment to protection of intellectual property,” Carlos Marcio Cosendey, head of Foreign Ministry’s economic department told reporters in Brasilia. “These are temporary measures aimed to force a change in the U.S.”

Well, India did right by its people in ignoring extortionary ripoffs under drug copyright laws by declining to sign onto product patents back when.

Hari Seldon · Post by **Hari Seldon** » 17 Mar 2010 17:45

The End of an Era in Finance
Amen.

CAMBRIDGE – In the world of economics and finance, revolutions occur rarely and are often detected only in hindsight. But what happened on February 19 can safely be called the end of an era in global finance.

On that day, the International Monetary Fund published a policy note that reversed its long-held position on capital controls. Taxes and other restrictions on capital inflows, the IMF’s economists wrote, can be helpful, and they constitute a “legitimate part” of policymakers’ toolkit.

Rediscovering the common sense that had strangely eluded the Fund for two decades, the report noted: “logic suggests that appropriately designed controls on capital inflows could usefully complement” other policies. As late as November of last year, IMF Managing Director Dominique Strauss-Kahn had thrown cold water on Brazil’s efforts to stem inflows of speculative “hot money,” and said that he would not recommend such controls “as a standard prescription.”

So February’s policy note is a stunning reversal – as close as an institution can come to recanting without saying, “Sorry, we messed up.” But it parallels a general shift in economists’ opinion. It is telling, for example, that Simon Johnson, the IMF’s chief economist during 2007-2008, has turned into one of the most ardent supporters of strict controls on domestic and international finance.

A thoughtful article. Good read, IMHO.

The ending paras are a hoot.

Support for a global financial-transaction tax is growing. A group of NGOs have rechristened it the “Robin Hood tax,” and have launched a global campaign to promote it, complete with a deliciously biting video clip featuring British actor Bill Nighy (www.robinhoodtax.org). Significantly, the European Union has thrown its weight behind the tax and urged the IMF to pursue it. The only major holdout is the United States, {unsurprisingly, lemme add}where Treasury Secretary Tim Geithner has made his distaste for the proposal clear.

What made finance so lethal in the past was the combination of economists’ ideas with the political power of banks. The bad news is that big banks retain significant political power. The good news is that the intellectual climate has shifted decisively against them. Shorn of support from economists, the financial industry will have a much harder time preventing the fetish of free finance from being tossed into the dustbin of history.{Aye, we can drink to that}

ldev · Post by **ldev** » 17 Mar 2010 23:01

China in Midst of ‘Greatest Bubble in History,’ Rickards Says

March 17 (Bloomberg) -- China is in the midst of “the greatest bubble in history,” said James Rickards, former general counsel of hedge fund Long-Term Capital Management LP.

The Chinese central bank’s balance sheet resembles that of a hedge fund buying dollars and short-selling the yuan, said Rickards, now the senior managing director for market intelligence at McLean, Virginia-based consulting firm Omnis Inc.

“As I see it, it is the greatest bubble in history with the most massive misallocation of wealth,” Rickards said at the Asset Allocation Summit Asia 2010 organized by Terrapinn Pte in Hong Kong yesterday. China “is a bubble waiting to burst.”

Rickards said leveraged speculation in the stock market, wasteful allocation of resources by state-owned enterprises, off-balance-sheet debt through regional governments and the country’s human rights record are concerns.

“Take Russia and China together, neither of them is really deserving any investment” except for short-term speculation, Rickards said. India and Brazil are two of the “real economies” among the developing countries, he said.

paramu · Post by **paramu** » 18 Mar 2010 01:16

Bank of England warns families to expect fall in living standards

Neshant · Post by **Neshant** » 18 Mar 2010 01:55

Germany Seeks IMF Role for Greece in Reversal, Lawmaker Says

March 17 (Bloomberg) -- Greece should turn to the International Monetary Fund if it needs aid, the chief finance spokesman for German Chancellor Angela Merkel’s party said, in a reversal that signals a rift with European leaders. (meaning we were bull&hitting the markets when we said we would help them pay their debts)

“We have to think about who has the instruments to push for Greece to restore its capital-markets access” (meaning go bankrupt and let german investors buy up assets on the cheap)

“Nobody apart from the IMF has these instruments.” (meaning instruments to kick their ass if they don't pay) Attempting a Greek rescue “without the IMF would be a very daring experiment.”

“The problem has to be solved from the Greek side and everything that is being considered has to be oriented in that direction,” (meaning don't look to us to pay off your debts bro. you're on your own)

“Greece is a member of the IMF and should avail itself of IMF aid first,” Frank Schaeffler, deputy finance spokesman in parliament for the Free Democrats, said in an interview.

Papandreou that there’s a need for “technical assistance from the IMF” without the fund “taking the lead.” (meaning we want the money but don't tell us to raise taxes and cut expenses).

http://www.bloomberg.com/apps/news?pid= ... Ekmk&pos=3

Hari Seldon · Post by **Hari Seldon** » 18 Mar 2010 05:31

paramu wrote:Bank of England warns families to expect fall in living standards

Must credit BoE with the courage to tell the truth, something missing entirely from the extend and pretend games DC has been playing on its willing-to-be-fooled public.

The latest TAE blogpost is a good read. TAE has been going somewhat darker in its D&G perspectives. So TIFWIW but their reasoning is flawless, IMVHO, hence more credible than that of mainstream green-shooters.

...it's been clear from the get-go that home prices supported -only- by taxpayer money are doomed to crumble; the only things achieved by the Fed's $1.25 trillion purchases are a temporary delay in home price plunges, and another giant transfer of bank and lender losses to the state (re: the population). If only for this reason the Fed would do well to warn the American people that hard times are a-coming.

Tim Geithner and Christina Romer tried to paint another rosy economic picture in front of the House Appropriations Committee ("there's progress, though it's challenging"), but even their own fellow Democrats don't buy into it anymore. American politics as a system has ceased to function, because the system has gone from representing people to representing money.

And that is something that can only go well as long as the people have at least some of that money.

Now that they're increasingly shut out, the system shuts down; it's inevitable. Which is why even rating agency Moody's comes with an at first glance curious warning: even the credit raters now predict pitchforks.

Oirope fares no better in recognizing and acting on its problems. Reality will force solutions down the line but they'll likely be more painful than an orderly planned unwinding of the debt+unfunded liability mountain. Sadly, that too much to expect from democratic netaships anywhere:

It’s every democratic politician's ultimate conundrum: if you don’t tell people the truth, they'll turn against you down the line; if you do tell them, they'll turn against you right away. That makes it obvious to figure out which politicians actually do get elected.

We've seen tear gas in Athens recently, and that was just a little taste. As you may know, I’m spending some time in France right now, and it's not hard to predict what will happen here if and when the government starts slashing salaries (as it must soon). The French simply won't understand what's happening, and mass protests will be the result, some peaceful, some violent.

Here's where Ilargi's opinions get interesting - on the longer term megatrends, on demographic evolution of events, on generational perspectives and conflicts of interest, on a historical timescale of past precedent....

We have a baby boomer generation that has just about all the money that's left in our societies. Their children, though, have nothing. Except for some hand-outs from their parents (I’m not talking individuals here). Unemployment among young people in many countries is downright scary, often in the 40%-50% range. No jobs, no money, no prospects. In times and places throughout history, this has brought populist dictators to the foreground, and pitchforks and torches into the streets, and there is no reason why it won't now.

Today's political power is firmly in the hands of the 40-year and older crowd; they have elected incumbent politicians, and more importantly, they have the money and thus the power. The younger generation has no money and no power, but they also have nothing left to lose.

That is a dangerous combination, and how we deal with it will be what decides our futures. {Amen}

Our societies, already barely able to survive current debt and deficit loads, are slowly -though increasingly faster- being eaten up by the monster of unfunded liabilities: healthcare and pensions. Be it the US Medicare, Medicaid and Social Security varieties, or their European and Japanese counterparts, we're looking at ticking explosives counting down the hours, days and years. Down here at the Automatic Earth we've long said that nobody presently under 50 (and planning to retire at 65) will ever see a penny from pensions or government retirement plans (well, perhaps that one penny).

OK, so what will/should the youngistanis do?

Government obligations will not be honored, because the younger generation must and will at some time take over, through elections or otherwise, and vote themselves (again, through elections or otherwise) an ever bigger piece of the pie.

And the pie will have gotten a lot smaller to boot. If time is money, and money is power, than time will be power too at some point: the young have the final advantage.

The denouement of intergenerational warfare can be ugly. What if healthcare is scaled down drastically 15 yrs down in the US? Will the elderly be subject to death panels - committee decisions on who gets rationed medical care due to better survival chances/productive potential? Continuing this line of thought leads evermore to scarier scenarios.

And general ignorance and denial - unwillingness more than inability to see where we are going helps maintain the current course straight towards the iceberg.

Most people are far too complacent when it comes to the consequences of a shrinking economic system.

Many claim that we can easily downsize to smaller homes and smaller lives, since there's so much we don't really need anyway, that we will move in together and return to "good" conversations, growing our own tomatoes and all that. But that's just not going to happen voluntarily, not on a large and wide scale.
{Well, lemme stick my neck out and be optimistic here. Thoughtful folks even in big SUVed yamerika are not averse to downsizing living standards by 20-30% to get by compared to the alternative of widespread dislocation and unrest}
The human mind has no reverse. It doesn't even have a steering wheel. We are built for one of two things: go forward or crash. It looks like there's no forward left before a major crash happens first.

It also looks like there's not a whole lot of people who realize this.{Agreed.}

Neshant · Post by **Neshant** » 18 Mar 2010 08:16

Dr. William Black's Lecture on the amazing level of fraud

https://webdisk.lclark.edu/econ/steinha ... t2010.html

Hari Seldon · Post by **Hari Seldon** » 18 Mar 2010 09:24

^^^ Bill Black and Liz Warren are probably the most trustworthy and competent (not to mention, patriotic) Wall St outsiders around. If the kahante really, seriously, sincerely, deeply wants reform, change and hope as much it needs them, then putting these folks in charge would be step#1.

However, don't hold your breath for that happening.

In any case, financial fraud by the wall st mafiosi is one thing. Even if it were all investigated, prosecuted, and disinfected (don't count on that either), the deeper longer-term structural problems in most oecd khanomies are not allieviated one bit. Recognition of the demographic seeds of wealth destruction is slowly but surely starting to dawn on the cutting edge of the khanomic intelligentsia, seems like. It is the unfunded liabilities time-bomb which will devastate what we know of the bubble era show prosperity in the west.

Here's the latest from resident alarmist AEP (doesn't sound so much like an alarmist these days, does he?).

Moody's fears social unrest as AAA states implement austerity plans (by Ambrose Evans-Pritchard)

Excerpts:

The world's five biggest AAA-rated states are all at risk of soaring debt costs and will have to implement austerity plans that threaten "social cohnesion", according to a report on sovereign debt by Moody's. The US rating agency said the US, the UK, Germany, France, and Spain are walking a tightrope as they try to bring public finances under control without nipping recovery in the bud. It warned of "substantial execution risk" in withdrawal of stimulus.

Bah, reports come and go AEP, kindly gimme more substance to your alarmism.

BTW, my ears perked up at the mention of this 'social cohesion under threat' kinda allah-ram-ism. Pray, what might it mean? Here's some more juicy detail

"We are not talking about revolution, but the severity of the crisis will force governments to make painful choices that expose weaknesses in society," he said. If countries tighten too soon, they risk stifling recovery and making maters worse by eroding tax revenues: yet waiting too is "no less risky" as it would test market patience. "At the current elevated debt levels, a rise in the government's cost of funding can very quickly render debt much less affordable."

Well, we'll see. Time will tell. Never underestimate anglo-saxonian ingenuity to find short term work-arounds, besides. They can keep the game going practically forever, or so they had me believe till recently.

Besides, UKLstan at least has shown it is alert and alive to the developing crisis. Here's what their treasury blurted out:

The Treasury said the assessment is unduly gloomy given that the maturity of UK debt is over 14 years, double the AAA average. This greatly reduces roll-over risk, giving Britain time to steady the ship. The concern is what will happen as the Bank of England stops purchasing bonds. An IMF study said quantitative easing had lopped 40 to 100 basis points off debt costs.

See? All ij well, onlee. jai ho.

What of the khanate retirements program? Has already been mentioned in this dhaga but bears repeating, IMHO.
Connecting the Dots: Social Security Edition

...the day of reckoning for Social Security drew nigh and now has come and gone, circa 2010.

Only unpleasant decisions lie ahead that will stun the second half of a Baby Boom generation of which some two-thirds essentially have no retirement savings other than the income they think their children and grandchildren will be willing to forego in future years to provide those promised Social Security benefits.

(Spoiler Alert: That isn't going to happen, although not without a protracted fight which will descend into an ugly inter-generational conflict as income-strapped Millennials, Gen-Xers, Gen-Yers and Echo Boomers refuse to pony up more of their diminishing wages that their savings-strapped parents and grandparents can recline at home beginning at age 62 and watch reruns of Dallas and Knot's Landing.

Late Boomers, born between 1954 and 1964, you heard it hear first: Get ready to be employed, in some fashion, until at least age 72, maybe age 75, maybe until you are carried out feet first, whichever occurs earlier. Can you say "Welcome to Wal-Mart?")

Well, at least the khans have been more forthright in admitting to underfunding of liabilities etc. No? Their numbers have been accurate so far. No?

Social Security, which as recently as a year ago had projected its reckoning day - the point at which annual outgo exceeds withholding tax revenues and interest income - would not approach until at least 2017. No worries, right mate?

Then SSA revised its forecast, advancing the crossover date (in the absence of any program changes) to 2016, a year earlier, but still a long time away in Washington, D.C. years where time virtually crawls. SSA also earlier in the fiscal year estimated its FY 2010 and FY 2011 shortfalls would be about $10 billion. Now the 2010 deficit alone may triple to nearly $30 billion.

Now the Associated Press has "discovered" the day of reckoning already has come and gone, six years early, in a folksy, oh-don't-worry-about-any-of-this piece which seems to find it more interesting that actual, printed, intra-governmental bonds, $2.5 trillion of IOUs, are kept in three-ring binders in the bottom drawer of a locked filing cabinet in West Virginia of all places than the disturbing reality of an insolvent pay-as-we-went retirement entitlement program

Then follow excerpts from the nyt article singha posted.

the true day of reckoning, some arbitrary date, say five years from now, before which Boomer retirees will qualify for all benefits under the current program and after which, well, sorry about your luck. Judging from trial balloons this Administration has launched over the last six months about entitlement "reform," we will not be surprised when some of us are told, by accident of date of birth, we will not get "our share." Furious, yes, but suprised, no, at least we shouldn't be if we are reading correctly the scribbling of the invisible hand on the wall.

Which sets us up for the mother of all inter-generational conflicts. Late Boomers will get squeezed (consider yourself warned) and see their retirement dates kicked far into an unknowable future, but don't be mad at your children and grandchildren - the Boomers would have done the same to their parents and grandparents in a heartbeat.

Well, but we know the poor children are blameless, right? Right??

And you children and grandchildren of the Boomers, wondering exactly why it is your parents and grandparents have no money saved for retirement...? Before your righteous indignation sets in, please take a moment to remember, fondly, all the Beanie Babies, Pogs, Tomagachis, Furbys, Barbies, Cabbage Patch Kids, music lessons and instruments, athletic lessons and equipment, summer adventure camps, trips to Disney World, skiing at Vail, Back Street Boys concerts, mountain bikes, X-Boxes, Nintendos, Segas and video games, CDs, DVDs, computers, stereos, televisions, cell phones, boom boxes, iPods, iPhones, 4,000 sf suburban homes, automobiles, boats, jet-skis, motorcycles, expensive-but-useless college educations, cosmetic surgery and glitzy/destination weddings which your elders showered upon you throughout your enchanted upbringings.

And don't be surprised when they (we) have to move in with you someday. Back to three generations in the same household, but look on the bright side: it might save on childcare expenses, depending on Grandma and Grandpa Boomer's schedules at Wal-Mart.

Welcome to the brave new Indic worldview of the 'joint family'. Lord knows it might get popular again back in Des because it's coming fromt he west.

Meanwhile, the scene from continental oirope is no less cheery.

But that's for another post.

Enopugh doom and gloom for today, IMO.

Chinmayanand · Post by **Chinmayanand** » 18 Mar 2010 11:40

Hari guru , whats the perspective on Australia ?

Hari Seldon · Post by **Hari Seldon** » 18 Mar 2010 11:52

durgesh wrote:Hari guru , whats the perspective on Australia ?

In a nut-shell "not good". Has to do with a lumbering housing bubble and a public debt load that matches anything oirope or NorthAm have to offer.

For details, best to visit economist (a sane one, for a change) Steve Keen's fine blog.
http://www.debtdeflation.com/blogs/

Hari Seldon · Post by **Hari Seldon** » 18 Mar 2010 15:51

Sri AEP rolls out yet more gems in his tireless crusade to discredit the EMU so that UKstan may look a tad more clothed in comparison only.
The proposed EU Greek bail-out cannot simply bypass German law
This time Sri AEP pulls out all stops in singing Germanic praises. Sample this...

Does nobody read German any more? Nearly all the reports on Europe’s bail-out for Greece appear to be coming from Paris, or Madrid, or sources within the Brussels apparatus determined to seize on the EMU crisis to advance the “Project”, this time by leaps and bounds towards fiscal federalism. This cannot possibly be done without German backing, so it is academic what these people think or want.

Ok.

As of today, German finance minister Wolfgang Schauble has not yet agreed to anything beyond a last resort rescue “if insolvency were imminent” and if there were to be a threat to the “financial stability of the euro area as a whole”. That raises the bar very high.

But whats with 'em mean germans, eh? Not rushing in to boor Club Med's aid, eh??

He cannot go further because any bail-out for Greece would breach the EU’s no-bail-out-clause, and would therefore violate the German Grundgesetz, or constitutional law. Eurosceptics in Germany already have their fingers on the trigger, waiting to launch a court challenge if the line is crossed. Quite why markets/pundits seem to assume that the EU can just finesse this with its usual creativity — dare I say, its fundamental lawlessness — is beyond me. Germany is a serious country. The law matters. I can only conclude that the persistent refusal to treat this as a genuine problem is because these pundits do not read German newspapers. They can read French and hack Spanish or Italian, and normally that is enough in EU affairs, but sometimes it is not, and this occasion is one of them.

Wow. even the packees don't praise their former arab lords in such glowing terms.

Then of course, the truth tumbles out...

As an aside, I happen to think that the German/EU policy of enforcing a ferocious fiscal squeeze on half Europe is demented and destructive. This Hooveresque strategy will tip these countries into a debt spiral, along the lines described by Irving Fisher in Debt Deflation Causes of Great Depressions (Economica, 1933). It will prove self-defeating, starting with Greece, which will see its public debt galloping up to 135pc of GDP this year. The policy will rebound against German exporters and Germany’s under-capitalized banks, ultimately dragging the entire eurozone into a deflationary swamp. Note that core inflation fell to a record low of 0.8pc in February. France’s Christine Lagarde is right to complain that Germany’s policy of perpetual wage-squeeze and export fetishism is untenable, and ultimately ruinous for monetary union.

And that is precisely where the union's headed, IMHO, along with assorted public sector unions onlee.
Read it all.

Singha · Post by **Singha** » 18 Mar 2010 18:09

has anyone run numbers on how much family expenses could be saved if
the average american family made simple lifestyle changes like:
- air drying their clothes (this is common in singapore and other far east,
most apts have folding rods going out of windows and people put up racks
in the common areas)
- using fans instead of central cooling or AC in summer
- using blankets and reducing the heating in winter
- avoiding halogen lamps and bulbs in favour of CFL and "tube lights"
- Govt encouraging clusters of shops in every area (think "sector markets" in Noida) instead of forcing anyone to drive 5 miles to get a carton of milk. no more pure residential zones with gleaming lawns and a lifeless look.

shravan · Post by **shravan** » 18 Mar 2010 20:39

prad wrote:many economists are saying US economy might create close to 300,000 jobs in March. i hope it's true. it won't be sustainable. but broad consensus is that for the next 3-6 months, we can expect 100,000+ jobs/month.

http://www.calculatedriskblog.com/2010/ ... dness.html
March 08, 2010

The BLS could report a March headline number of 200,000 net payroll jobs, and that could be viewed as a weak report.

The March report will be distorted by two factors: 1) any bounce back from the snow storms, and 2) the decennial Census hiring that picked up sharply in March.

Many analysts considered the February BLS report - showing a headline net loss of 36,000 jobs - as an improvement over January because of snow factors. The general view is the snowstorms subtracted 50,000 to 150,000 payroll jobs from the report. I think this is a huge unknown, but I think the actual impact was fairly low.

Also in February, the Census added 15,000 workers. Although this number is NSA (Not Seasonally Adjusted), there really is no seasonal factor for this hiring. If we estimate job losses at 50,000 ex-Census in February, this would imply a range of 0 to 100,000 jobs would have been added without snow factors - if the analysts are correct about the impact of the snow storm.

Also the Census will add something like 100,000 workers to the March report. Luckily the Census Bureau reports the Census hiring - May will be the really crazy month with 100s of thousands of workers added to follow-up on anyone who didn't mail back the Census (Mail it back!).

Add the numbers up: If the economy added no jobs in February (after snow effects) and no jobs in March, the March employment number would be 150,000 (50,000 bounce back from the snow, 0 for March, and 100,000 Census hiring).

If the economy added 50,000 jobs in February (after snow) - the consensus view - and adds another 50,000 in March, the March number will be around 250,000. And remember it takes 100,000 to 150,000 net jobs added per month to stay up with population growth. So a headline number of 250,000 - though an improvement - would still be a weak report because it just means 50,000 in March after distortions.

And if the economy added 100,000 jobs in February (very unlikely in my view), and another 100,000 in March - the bounce back would be 150,000 + 100,000 for March + 100,000 for the Census - and we would see a report of 350,000 jobs!

The Census distortions will last most of the year. The Census will add jobs through May, and then subtract jobs for the following 6+ months. Right now it is making the payroll report look better and will lower the unemployment rate slightly over the next few months (just 0.1% to 0.2%), and starting in June, Census hiring will make the payroll report look worse - but the net will be close to zero by the end of the year.

krisna · Post by **krisna** » 19 Mar 2010 00:42

http://breezejmu.org/2010/03/18/us-is-r ... c-decline/

The only difference between the two is the timeline — America is on the verge of adding to its collection of entitlement programs while the Greek economy has already been broken by them.

But Greece is only the beginning; a quick look at the fiscal health of all EU countries reveals an entire continent unraveling due to the massive debts incurred by the unrestrained growth of the European welfare state.

With a budget deficit of more than $20 billion, California is bankrupt, and much like Greece, social welfare programs and public employee unions are to blame.

arnab · Post by **arnab** » 19 Mar 2010 05:24

Hari Seldon wrote:
durgesh wrote:Hari guru , whats the perspective on Australia ?
In a nut-shell "not good". Has to do with a lumbering housing bubble and a public debt load that matches anything oirope or NorthAm have to offer.

For details, best to visit economist (a sane one, for a change) Steve Keen's fine blog.
http://www.debtdeflation.com/blogs/

Incorrect actually - Australia has one of the lowest public debt in the world (In fact before GFC it was actually in a 'net asset' position). Steve Keen is probably talking about private household debt. I agree there is a housing price bubble in Australia - but wouldn't panic really. Australia unlike US has a shortage of housing (rather than a glut).

ArmenT · Post by **ArmenT** » 19 Mar 2010 09:12

Singha wrote:has anyone run numbers on how much family expenses could be saved if
the average american family made simple lifestyle changes like:
- air drying their clothes (this is common in singapore and other far east,
most apts have folding rods going out of windows and people put up racks
in the common areas)

Already do this for SHQs clothes. I'm the one that uses dryers, whereas she's of the mindset that airdrying preserves her clothes better. I do it on a few of my clothes as well, which are marked line dry (moi being SDRE, I usually wear wash-n-wear t-shirts and shorts, but I do have a few nice clothes, mostly gifts, that need line drying). Of course, it is not allowed by law to have a clothes line outside, so we have foldable drying racks that I set up in the back bedroom. I'm in charge of laundry as she does the cleaning.

Singha wrote:- using fans instead of central cooling or AC in summer

We do this most of the time unless it gets really really hot and muggy

Singha wrote:- using blankets and reducing the heating in winter

Thermostat never goes above 68 F or so. We like blankets.

Singha wrote:- avoiding halogen lamps and bulbs in favour of CFL and "tube lights"

Every bulb in our place is CFL already. Tubelights cause headaches for some people.

Singha wrote:- Govt encouraging clusters of shops in every area (think "sector markets" in Noida) instead of forcing anyone to drive 5 miles to get a carton of milk. no more pure residential zones with gleaming lawns and a lifeless look.

We are walking distance from two grocery store and usually walk over to get food.

Singha · Post by **Singha** » 19 Mar 2010 10:31

I suspect for most americans with lawns, line drying clothes or opening the windows and using cheap fans would be a lossofface/shame/log kya kahenge thing same as someone repairing his own plumbing pipes in india.

only some serious crisis can make people change their frame of reference.

vera_k · Post by **vera_k** » 19 Mar 2010 10:38

^^^

It indicates you have low income if you cannot afford to spend on the electricity to dry your clothes. And most suburban people want to keep the low income population out as they don't want those kids going to the same school as their kids because lower income kids hold everyone back.

Hari Seldon · Post by **Hari Seldon** » 19 Mar 2010 13:28

Incorrect actually - Australia has one of the lowest public debt in the world (In fact before GFC it was actually in a 'net asset' position). Steve Keen is probably talking about private household debt.

My bad. Spoke prematurely, perhaps.

Pvt debt going public has ~~great~~ gleat precedent of late, eh? Sovereign balance sheets from Japan to yumrika sing a familiar tale. Time will tell if Ozzie banksters have performed state capture or merely regulatory capture when push comes to shove.

Anyway, as a net commodities exporter, ozland has more in common (culturally too) with opec than with UKstan.

markos · Post by **markos** » 19 Mar 2010 13:33

prad wrote:N.J. Gov. Chris Christie campaigns to garner support for proposed budget cuts

http://www.nj.com/news/index.ssf/2010/0 ... paign.html

_________________________________

imvho, Christie represents the first systematic attack against bloated state budgets and criminal looting of taxpayer money by public unions. he's backing his rhetoric with actions. he's going to piss off a lot of unions and powerful Leftist lobbies that have been sucking on citizens' money for a very long time. i wish him the best.

but it's just the beginning. lot more has to come.

Looks like fat man Christie is taking a page from the republican god Ray-gun. Ray-gun increased social security taxes and then raided those taxes to give a tax-cut to the wealthy. Fat man Christie is doing the same

http://www.businessweek.com/ap/financia ... GERV00.htm

Democrats likely will be reluctant to support such a budget -- so long as Christie refuses to budge on a so-called millionaire's tax. The levy on those making more than $400,000 per year expired in December and Christie has vowed not to reinstate it.

When the state cuts the aid to education, local school districts will be forced to pick up the tab by increasing the property taxes because property taxes fund school districts in US and the quality of the school district determines the real estate value in US. So all Christie is doing is passing the buck instead of solving anything and giving a tax-cut to the rich while blaming the unions. It may fool some people for sometime, but sooner or later people are going to wake up to increased property tax (or lowered property values) and they may be forced to move to PA or OH in search of better school districts thanks to Christie.

Anyway, for republicans public schools, medicare, medicaid and social security are all forms of socialism. So defeat socialism by bringing down your nearest school district!!

SwamyG · Post by **SwamyG** » 19 Mar 2010 21:59

Singha ji: Please add the following to your list onlee:
* Stop drinking soda/pop twice a day
* Stop buying water in bottles {most of the cities have good drinking water, with fluoride}
* Make lunch at home and get it to work {no getting soup cans, frozen meals and heating in the office microwave does not count}
* Stop eating processed snacks in the afternoon.
* It is okay to not own a house and live in close-knit neighborhoods.
* Watching movies in theaters does not mean one needs to buy $20+ worth of popcorn and soda/pop.
* It is okay to not buy newly released DVDs.
* It is okay to not buy merchandise related to the latest movies. The towel with Transformers has the same efficiency as with the towel with Spiderman figure on it.
* It is okay to cook dinner.

Vikas · Post by **Vikas** » 19 Mar 2010 22:50

^^ Saw a big line last evening outside Best Buy on the launch of some DVD (New Moon I guess).

It is okay to not buy newly released DVDs.

Singha · Post by **Singha** » 19 Mar 2010 23:24

* its ok not to buy the latest iToy
- we will soon see lines of overnight campers waiting to buy the iPad

* downsize car from camry to corolla size
- its adequate for a family of four + luggage and 99% of the time its just 1 or 2 persons in the car anyway. saves capex and opex.
* single guys stop buying big black dodge durango or ram pickups to prove
how much meat they have under the pants..er hood.
* its ok to cook dinner - its not a insult to women for them to cook a good meal for the family or the slob boyfriend watching tv and snacking on chicken nuggets

SwamyG · Post by **SwamyG** » 19 Mar 2010 23:37

Here is a good article at the concessions stand at the cinema halls. Cinema concessions: an essential luxury: evaluating popcorn for the big screen.. It is fun and very informative read.

Whilst movies may provide the motivation for the consumer to go to the cinema, for the cinema owner it is vital that once you are there, you spend money. Concessions are a key profit maker for many cinemas, providing a source of revenue that does not need to be shared with others (such as film rentals that are shared with distributor).

According to one source, in the US cinema companies reap 85 cents on the dollar for concessions, compared with 70 cents per dollar on ticket sales.

According to one source, in the US cinema companies reap 85 cents on the dollar for concessions, compared with 70 cents per dollar on ticket sales.

From this research, a rough rule of thumb that has become apparent is that if concessions account for 25 per cent of a cinema's revenues, they will represent around 50 per cent of its profits. As competition in some territories pushes average ticket prices down, and as concessions marketing techniques and product diversification increases per visitor spend, concessions are likely to take an increasing share of a cinema's overall revenues and profitability. In one cinema in the US, concessions accounted for 100 per cent of profit (as movies were actually loss-making).

Bottom-line (pun intended) - Spend more money onlee please.

And according to Wikipedia, the popcorn sold @ Regal Cinema in US has the same saturate fat as 3 Big Macs. How more evil can things get

Surya · Post by **Surya** » 20 Mar 2010 06:56

oh boy

another round of tax and spend liberals vs borrow and spend rightiwngers

amdavadi · Post by **amdavadi** » 20 Mar 2010 07:47

Since we are talking about california. In my opinion republican control california governship since 1967 starting with
ronald reagan to Arnold.Except two terms of jerry brown & 6 years of gray davis.They been in charge for 29 years.They
are responsible for california mess more than what they can blame tree hugging liberals for.

Singha · Post by **Singha** » 20 Mar 2010 07:48

visit NJ high schools and study them carefully: the amount of excesses and extravagances is astounding.

have to agree. the extent of spending on sports infra is amazing. some schools
have stadiums that put indian proper stadiums to shame. there are also science
labs allegedly better than some univs in massa itself.

Hari Seldon · Post by **Hari Seldon** » 20 Mar 2010 10:36

Surya wrote:oh boy

another round of tax and spend liberals vs borrow and spend rightiwngers

I agree.

Sadly reality is in a third corner, all on her own. And we all know, that antataha satyamev jayate, i.e. in the end truth prevails. Reality too will impose its will.

So the way ahead is tax and repay what was borrowed. There'd be zilch left for spending only. Worst of both worlds. Jai ho.

shyam · Post by **shyam** » 20 Mar 2010 11:41

For those who don't know, FHA is what props ups the US real estate market by guaranteeing low interest, low down payment mortgages.
The FHA Is Being Run Like A Ponzi Scheme That Will Surely Implode

That’s why we’re saying this resembles a Ponzi scheme. The health of the FHA portfolio is now entirely predicated on FHA loans being refinanced into new FHA loans.

Neshant · Post by **Neshant** » 20 Mar 2010 12:54

Promoting cronyism behind an iron curtain of secrecy under the guise of 'independance'. Namely the independance to do favors for the same banks that support the fed's existance.

-----------
Federal Reserve Must Disclose Bank Bailout Records

http://www.bloomberg.com/apps/news?pid= ... rzjENZQV5k

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program.

SwamyG · Post by **SwamyG** » 20 Mar 2010 20:01

Singha wrote:visit NJ high schools and study them carefully: the amount of excesses and extravagances is astounding.

have to agree. the extent of spending on sports infra is amazing. some schools
have stadiums that put indian proper stadiums to shame. there are also science
labs allegedly better than some univs in massa itself.

Sports is a multi-million dollar business. If one dares to ask why such money is needed for the Universities, one does not really get a convincing answer. I had a coworker from Pakistan; his thought was Amirkhans were kept brainwashed by Unkil via sports. There is an element of truth in it; like the Romans, Unkil gives Amirkhans circus instead of health insurance.

SwamyG · Post by **SwamyG** » 21 Mar 2010 07:43

also, it is amazing how Pakis are ridiculed everywhere else on the forum, but when it comes to the evil "Amrikhans" they have it right, don't they!

It looks like I pushed some buttons

. Take it easy.

1. I just there is an element of truth, that being the Amirkhans are so immersed in sports and tend to forget some of the other worries.
2. I for one, do not ridicule Pakistanis. In fact I try to use the term Pakistani as much as possible. Kya kare akhir mein be human jo tahra, so sometimes, me too call them Paki.

All of us have had exposure to many from so many systems and countries, and we have seen both good and bad people. When we criticize a system or a society we are pointing out at the general tendencies. Because the very nature of generalizations, it is bound to be faulty in several areas.

You want to hear what a caller told to a radio show host? "The difference between Russians and Americans? Russians know about their government propaganda, but the Americans don't know about their propaganda".

Neshant · Post by **Neshant** » 21 Mar 2010 11:59

Robert Prechter on why you should exit stocks now

http://www.youtube.com/watch?v=_zQahyH27CE

summary
- stock market is making a double top
- dividends are at close to their (3rd) lowest point in 100 years!
- stay in US dollars
- big buying opportunity coming up in stocks in about 1.5 to 2 years from now
- commodities set to fall, get ouf of oil and gold