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Archive for January 22nd, 2009

Obama believes China is manipulating currency

Posted by WARREN MOSLER on 22nd January 2009


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Here we go:

Think they realize exports are real costs and imports real benefits???

Obama Deems China ‘Manipulating’ Yuan, Geithner Says

by Rebecca Christie and Mark Drajem

Jan 22 (Bloomberg) — President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Geithner said in the remarks, which were posted on the Senate Finance Committee Web site today. “The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment.


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Posted in Articles, China, Currencies, Obama | 1 Comment »

Re: UK currency heading south

Posted by WARREN MOSLER on 22nd January 2009


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>   
>   On Thu, Jan 22, 2009 at 12:06 AM, Russell wrote:
>   
>   Warren:
>   
>   Is the UK going BK.
>   

Many private sector agents, but not the government. There is no such thing in local currency, and the FX debt is private, not public.

When government takes over a bank and declares it insolvent, the holders of foreign currency debt can become shareholders, general creditors in liquidation, or simply wiped out if not senior enough.

There is no reason for government to pay any FX.

>   
>   They are going to have to nationalize the banks and take interest rates to zero.
>   

Looks like they will be making those choices.

>   
>   The Pound is probably going to get par with the USD.
>   

There’s an ‘inventory liquidation’ of pounds going on, as players exit, as well as private sector agents short USD and other FX covering.

The low price of crude had dried up the dollar income of the rest of the world as our trade gap shrinks, leading to a dollar short squeeze.

(Russian and mid east oil dudes who were selling their dollar revenue for the pounds they were spending on London flats and entertainment when oil was high, have cut back on the way down.)

And the worlds portfolio managers and army of trend followers are piling in with their shorts.

While this is a ‘one time’ event, it’s a big one!

The pound has looked over valued to me on an anecdotal purchasing power parity basis for quite a while. Last time I was there seemed even at one to one with the dollar prices would still be way too high over there.

Fundamentally, apart from anecdotal purchasing power parity, the pound looks OK. Fiscal has been tight for a while and isn’t all that loose yet, though they are talking about larger deficits. Prices are in check, with asset prices falling. And borrowing to spend is way down, probably for a while. But the same is true for the US, so there’s no bias there.

Net net, the pound was an indirect beneficiary of the high oil prices, and getting hurt by the fall.

British pound


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Posted in Email, UK | No Comments »

2009-01-22 USER

Posted by WARREN MOSLER on 22nd January 2009


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MBA Mortgage Applications (Jan 16)

Survey n/a
Actual -9.8%
Prior 15.8%
Revised n/a

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MBA Purchasing Applications (Jan 16)

Survey n/a
Actual 303.10
Prior 295.10
Revised n/a

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MBA Refinancing Applications (Jan 16)

Survey n/a
Actual 6491.80
Prior 7414.10
Revised n/a

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Housing Starts (Dec)

Survey 605K
Actual 550K
Prior 625K
Revised 651K

 
Karim writes:

  • Housing starts fell 16% in December and building permits fell 10.7%, and both to all-time lows in nominal terms.
  • These numbers indicate that housing will be a drag on the economy in terms of GDP accounting at least through year-end.
  • The level of starts consistent with new household formation (and adjusting for obsolescence of the existing housing stock) is about 1.25mm.
  • But what the current level of starts of 550k does not reflect is the record level of vacant homes (about 1mm more than the 1985-2005 average).

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Building Permits (Dec)

Survey 600K
Actual 549K
Prior 616K
Revised 615K

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Initial Jobless Claims (Jan 17)

Survey 543K
Actual 589K
Prior 524K
Revised 527K

 
Karim writes:

  • Initial claims jumped 62k to 589k, and continuing claims by 93k to 4607k.
  • Both are new highs for the current cycle and the highest since 1982.

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Continuing Claims (Jan 10)

Survey 4534K
Actual 4607K
Prior 4497K
Revised 4510K

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Jobless Claims ALLX (Jan 17)

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House Price Index MoM (Nov)

Survey -1.2%
Actual -1.8%
Prior -1.1%
Revised n/a

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House Price Index YoY (Nov)

Survey n/a
Actual -8.7%
Prior -7.6%
Revised n/a

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House Price Index ALLX (Nov)


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Posted in Daily | No Comments »