Wednesday, May 9, 2012
Tuesday, May 8, 2012
99 weeks; perhaps not the best political calculation after all...
Extending unemployment benefits may have seemed politically expedient at the time(s), but if a high unemployment rate is, as many think, an insurmountable hurdle for an incumbent president, it could backfire big time...
The story behind the story of the 8.1% unemployment rate, is the 14.5% "true" unemployment rate - when you factor in those who have "left the workforce"... Now think about it; of course you wouldn't do this, but do you think maybe a few of the unemployed would pretend to look for a job for 99 weeks, then when their unemployment checks run out, step out of the workforce? You think maybe a lot would? I mean if benefits were to cease after say 26 weeks (the olden days), today's dropout would've dropped out (dropping the headline unemployment rate) 72 weeks ago, right?...
As for the jobs that have been landed of late, I wonder to what extent that's the result of folks having to go to work now that their benefits have finally expired? Again, the U.S. employment picture, I think, would have started looking a whole lot better a whole lot sooner were it not for the unemployment benefit extensions...
The story behind the story of the 8.1% unemployment rate, is the 14.5% "true" unemployment rate - when you factor in those who have "left the workforce"... Now think about it; of course you wouldn't do this, but do you think maybe a few of the unemployed would pretend to look for a job for 99 weeks, then when their unemployment checks run out, step out of the workforce? You think maybe a lot would? I mean if benefits were to cease after say 26 weeks (the olden days), today's dropout would've dropped out (dropping the headline unemployment rate) 72 weeks ago, right?...
As for the jobs that have been landed of late, I wonder to what extent that's the result of folks having to go to work now that their benefits have finally expired? Again, the U.S. employment picture, I think, would have started looking a whole lot better a whole lot sooner were it not for the unemployment benefit extensions...
Sunday, May 6, 2012
QE3's a Coming!!
It's Sunday evening, just looked at stock futures (not pretty) and caught up on the election results in Greece and France (very not pretty)...
A new crop of politicians seized the opportunity to make entirely unfulfillable promises... Shaming their predecessors who dared to renege on all their unfulfillable promises just because they didn't have the revenue to make the payments on all the debt they incurred to fund the deficits they incurred to fund all their unfulfillable promises... Of course if the opportunists had been at the helm all this time, the citizens of these two great (not!) countries would be enjoying the spoils of robust economies, or so they promised (I honestly don't "know" what they promised, but politics ain't rocket science)...
"So then", you ask, "if, when the dust settles, this is bad news; what's the likeliest scenario for the economy and the stock market for the balance of the year?" "Sorry", I reply, "I won't prognosticate on either, but I'll be happy to speculate on the responses of policymakers" (odds are good that I'll be right on two of these three [number two being the least certain]):
1. In response to panicky credit markets in Europe (spiking interest rates) the ECB will open yet more windows for banks to come get really cheap money...
2. The EC, the IMF and the ECB (the so-called troika) will meet the new regimes at the negotiating table... Yes, alas, there'll be private meetings, public promises and plenty of printing till they come up with enough somethings to calm the debt markets and justify the next round of bailouts... (This one's likely, but a tough one for the troika, particularly with regard to Greece... They've been very definite with their threats to abandon the bailouts if austerity measures aren't implemented...)
3. As for the Fed: QE3 is a coming if this gets ugly...
But you're still wondering what'll happen (in the near-term) with stocks? Is it d
A new crop of politicians seized the opportunity to make entirely unfulfillable promises... Shaming their predecessors who dared to renege on all their unfulfillable promises just because they didn't have the revenue to make the payments on all the debt they incurred to fund the deficits they incurred to fund all their unfulfillable promises... Of course if the opportunists had been at the helm all this time, the citizens of these two great (not!) countries would be enjoying the spoils of robust economies, or so they promised (I honestly don't "know" what they promised, but politics ain't rocket science)...
"So then", you ask, "if, when the dust settles, this is bad news; what's the likeliest scenario for the economy and the stock market for the balance of the year?" "Sorry", I reply, "I won't prognosticate on either, but I'll be happy to speculate on the responses of policymakers" (odds are good that I'll be right on two of these three [number two being the least certain]):
1. In response to panicky credit markets in Europe (spiking interest rates) the ECB will open yet more windows for banks to come get really cheap money...
2. The EC, the IMF and the ECB (the so-called troika) will meet the new regimes at the negotiating table... Yes, alas, there'll be private meetings, public promises and plenty of printing till they come up with enough somethings to calm the debt markets and justify the next round of bailouts... (This one's likely, but a tough one for the troika, particularly with regard to Greece... They've been very definite with their threats to abandon the bailouts if austerity measures aren't implemented...)
3. As for the Fed: QE3 is a coming if this gets ugly...
But you're still wondering what'll happen (in the near-term) with stocks? Is it d
The 99% get screwed, Again!!
"They" say; "It's simply not fair that some prosper and some don't in this here greatest nation on earth''... True that!! Yet another example was illustrated in last Tuesday'sWall Street Journal article UAW Freezes Rival Out of Rebound...
As you'll read, an auto manufacturing plant in Moraine, Ohio, one of GMs most productive, was shut down during bankruptcy proceedings in favor of unproductive capital-burning plants, for the simple reason that its workers did not belong to the UAW... Wow!! I am forever amazed at what can be had in return for political favor - at the expense of integrity, productivity, profitability, the rule of law, freedom and, dare I say,fairness (no, scratch that, fairness is way too subjective) - there's [virtually] no bounds... If this is to be the culture of the GM of the future, I predict, well, let's just not bail them out next time...
Once again, politicians picked their winner, that 1.2% (UAW membership as a % of the U.S. population) and their losers (Moraine, Ohio - and society at large - as productivity leads to long-term employment, better quality, better pricing, better economy)...
As you'll read, an auto manufacturing plant in Moraine, Ohio, one of GMs most productive, was shut down during bankruptcy proceedings in favor of unproductive capital-burning plants, for the simple reason that its workers did not belong to the UAW... Wow!! I am forever amazed at what can be had in return for political favor - at the expense of integrity, productivity, profitability, the rule of law, freedom and, dare I say,
Once again, politicians picked their winner, that 1.2% (UAW membership as a % of the U.S. population) and their losers (Moraine, Ohio - and society at large - as productivity leads to long-term employment, better quality, better pricing, better economy)...
Friday, May 4, 2012
Government, the economy's best friend??
A CNBC senior staff writer writes"Government has become its own worst enemy when it comes to the economy, with public spending putting a damper on growth that otherwise continues at a steady if unspectacular pace."
Amen Brother!! Finally the mainstream (CNBC?) media is starting to publish a little logic, or so I thought upon reading paragraph one of last Friday's article Economy's Biggest Drag Right Now Is Government. Of course I should have known that Mr. Cox was simply stating statistical fact... In that GDP is the sum of consumer spending, investment, government purchases, and net exports, as represented by the equation:
Y= C + I + G + NX
The two factors I wouldn't sweat are government spending (except of course when it rises) and net exports. Think about it, while for the moment, less government spending lowers GDP, less government spending 'ultimately' means more resources remaining in the private sector (consumer, investment). As for net exports; lower NX = higher FCI (foreign capital investment [they do something with those dollars]).
I would say that Government, when it spends less, may indeed be "its own worst enemy", but, longer-term, it's the economy's best friend.
Amen Brother!! Finally the mainstream (CNBC?) media is starting to publish a little logic, or so I thought upon reading paragraph one of last Friday's article Economy's Biggest Drag Right Now Is Government. Of course I should have known that Mr. Cox was simply stating statistical fact... In that GDP is the sum of consumer spending, investment, government purchases, and net exports, as represented by the equation:
Y= C + I + G + NX
The two factors I wouldn't sweat are government spending (except of course when it rises) and net exports. Think about it, while for the moment, less government spending lowers GDP, less government spending 'ultimately' means more resources remaining in the private sector (consumer, investment). As for net exports; lower NX = higher FCI (foreign capital investment [they do something with those dollars]).
I would say that Government, when it spends less, may indeed be "its own worst enemy", but, longer-term, it's the economy's best friend.
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