Monthly Archives: February 2009

Peggy Noonan quote

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Yes, thanks!

>   
>   W: Here is a quote of Peggy Noonan whose WSJ columns I frequently read. I
>   think she sums up the two parties’ basic positions succinctly. Nowhere does
>   she recognize the reality of Federal spending driving the whole economy. She
>   still sees the US Treasury as a kind of piggy bank that has to be full before
>   you can draw on it for any purpose.
>   
>   ”The national conversation on the economy is frozen, and has been for a
>   while. Republicans say tax cuts, tax cuts, tax cuts. Democrats say spend, new
>   programs, more money. You can’t spend enough for the Democratic base, or
>   cut taxes enough for the Republican. But in a time when all the grown-ups of
>   America know spending is going to bankrupt us and tax cuts without spending
>   cuts is more of the medicine that’s killing us, the same old arguments, which
>   sound less like arguments than compulsive tics, only add to the public sense
>   that no one is in charge.”
>   
>   Uncle D.
>   


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OPEC January Crude Output Down 1,050,000 Bbl/Day to 28.565 Mln

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OPEC January Crude Output Down 1,050,000 Bdl/Day to 28.565M

Feb 3 (Bloomberg) — Crude-oil production from the 12 OPEC members in January declined 1,050,000 barrels a day from December, the latest Bloomberg survey of producers, oil companies and industry analysts shows. Figures are in the thousands of barrels a day.

Opec Production
January 2009

Opec Country Jan Est. Dec. Monthly Output Jan. 1 Change Est. vs. Target* Est. Target Est. Cap. (@)
Algeria 1,275 1,330 -55 1,202 72 1,450
Angola 1,740 1,820 -80 1,517 223 2,000
Ecuador 475 500 -25 434 41 500
Indonesia* – – – – – –
Iran 3,800 3,850 -50 3,336 464 4,100
Iraq* 2,365 2,345 20 – – 2,500
Kuwait# 2,280 2,350r -70 2,222 58 2,650
Libya 1,630 1,660r -30 1,469 161 1,800
Nigeria 1,810 1,900 -90 1,673 137 2,500
Qatar 725 790 -65 731 -6 900
Saudi Arabia# 8,025 8,400 -375 8,051 -26 10,800
U.A.E 2,290 2,350 -60 2,223 67 2,800
Venezuela 2,150 2,320 -170 1,986 164 2,500
Total OPEC-12 28,565 29,615r -1050 — — 34,500
Total OPEC-11* 26,200 27,270r -1070 24,845 1,355 32,000

*Quotas effective Jan. 1, 2009. OPEC agreed at its Dec. 17 meeting in Algeria to cut its quota target by 2.463 million barrels a day from the previous level, to 24.845 million barrels daily from Jan. 1. The quota target excludes Iraq, which has no formal quota, and Indonesia which left OPEC at end-2008.

Totals rounded.
r = revised @ = Capacity attainable within 30 days and sustainable for 90 days.
# Includes Neutral Zone production shared equally between Saudi Arabia & Kuwait.


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Re: deficit spending adds to savings

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(email exchange)

Think of it this way.

  1. Treasury spends $1 trillion by making deposits to bank accounts at the Fed. The spending adds $1 trillion of income and $1 trillion of new balances (not new balance shoes) that in the first instance are excess reserves at the fed.

  2. Treasury offers treasury securities for sale at auction. The purchase of those securities reduces the new, excess balances at the Fed, and replaces them with treasury securities, which are in fact nothing more than different accounts at the Fed. So operationally the Fed debits bank accounts on its books and credits securities accounts on its books.

  3. Again, the result is $1 trillion of new income and $1 trillion of new treasury securities held by the non government sectors.

Deficit spending adds exactly that much to our savings. The idea that ‘it has to come from somewhere’ and ‘borrowing removes savings’ are inapplicable with non convertibility currency/ floating FX policy.

If you count the new treasury securities as ‘money supply’ then it adds to money supply. If you don’t it doesn’t. Government spending is counted as GDP.

>   
>   On Feb 6, wrote:
>   
>   Question- Treasury needs to raise a trillion dollars to fund shortfall- so they
>   sell a trillion dollars of treasuries which Fed reserve bank buys and puts on its
>   balance sheet- what is the effect on economy? Money supply?
>   


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3 blind mice- nonsense from the BOJ, MOF, and Prime Minister

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Running with tails cut off with a carving knife:

This is what you get when the head of the CB doesn’t understand monetary operations and reserves accounting:

Shirakawa Says BOJ to Limit Asset Buying to Save Balance Sheet

by Jason Clenfield and Toru Fujioka

Feb 5 (Bloomberg) — Bank of Japan Governor Masaaki Shirakawa said the central bank will limit its purchases of stocks and corporate debt to protect its balance sheet and the credibility of the yen.

“We are mindful of the need to eventually end the purchases” as they are “extraordinary measures,” Shirakawa told lawmakers in Tokyo today. Excessive buying would worsen the central bank’s balance sheet and “have a clear impact on the yen’s credibility,” he said.

This what you get when the Finance Minister, Deputy Party Chairman, and former Finance Minister don’t understand monetary operations and reserve accounting:

Nakagawa Says Japan Isn’t Considering Printing Money

by Keiko Ujikane

Feb 6 (Bloomberg) — Japan’s government isn’t considering printing new money, Finance Minister Shoichi Nakagawa said.

He was responding to a report in the Financial Times that ruling party lawmakers would today propose printing 50 trillion yen ($549 billion) of a new currency to be used to pay for stimulating the economy.

“The idea of the government printing money isn’t in my mind,” Nakagawa said at a press briefing in Tokyo today.

“Japan’s economy is worsening rapidly so some people are discussing various ways of financing business activities and daily life.”

Yoshihide Suga, deputy chairman of the ruling Liberal Democratic Party election strategy council, is among the group of politicians that will suggest using 30 trillion yen of the money on projects such as doubling the size of Tokyo’s Haneda airport, the Financial Times reported. The other 20 trillion yen would be for government purchases of stocks and real estate.

Bank of Japan Governor Masaaki Shirakawa said Feb. 3 such a plan would hurt the credibility of the yen and lead to an increase in long-term yields by raising concern about the government’s ability to pay back the debt.

Former Finance Minister Bunmei Ibuki, speaking at a meeting of ruling LDP factions, said currency printed by the government rather than the Bank of Japan would devalue the yen and invite inflation, according to the Yomiuri Newspaper.

Discussions about the printing the money weren’t in the public interest, Ibuki said.

This is what you get when the Prime Minister doesn’t understand monetary operations or reserve accounting:

Japan May Consider 50 Trillion Yen in Scrip, FT Says

by Dave McCombs

Feb 6 (Bloomberg) — An aide to Japan’s Prime Minister Taro Aso and some lawmakers will today propose printing 50 trillion yen ($549 billion) worth of a new currency to be used to pay for stimulating the economy, the Financial Times reported, citing Koutaro Tamura, an upper house Diet member.

Yoshihide Suga, deputy chairman of the ruling Liberal Democratic Party election strategy council, is among the group of politicians that will suggest 30 trillion yen of the scrip for programs for new industries and projects such as doubling the size of Tokyo’s Haneda airport, the report said. The other 20 trillion yen worth of the new currency would be allocated to government purchases of stocks and real estate.


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China pushing hard on exports

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Looks like at least part of the plan is to push exports via lower prices.

China to Raise Export Rebate for Textiles to 15%, Xinhua Says

by Zhang Dingmin

Feb 4 (Bloomberg) — China will raise export tax rebates for textiles and garments to 15 percent from 14 percent, the Xinhua News Agency reported today, citing a meeting by the State Council.

The move was part of a plan to boost the textile industry, the official news agency said. The council also passed a plan to support the nation’s equipment manufacturing industry, it said.


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2009-02-06 USER

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Karim writes:

Job losses picking up speed and hours worked continue to plunge.

  • -598k job losses in January
  • Benchmark revision for 2008, -400k
  • Unemployment rate up from 7.2% to 7.6%
  • Hours worked down another 0.7% (biggest driver of personal income)
  • Augmented unemployment rate rises from 13.5% to 13.9% (was 8.7% in December 2007)
  • Diffusion index down to 25.3 from 25.5 (only 2 sectors to add jobs were education, 54k, and government, 6k)

Change in Nonfarm Payrolls (Jan)

Survey -540K
Actual -598K
Prior -524K
Revised -577K

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Change in Nonfarm Payrolls YoY (Jan)

Survey n/a
Actual -3500.00
Prior -2589.00
Revised n/a

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Nonfarm Payrolls ALLX (Jan)

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Unemployment Rate (Jan)

Survey 7.5%
Actual 7.6%
Prior 7.2%
Revised n/a

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Unemployment Rate ALLX 1 (Jan)

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Unemployment Rate ALLX 2 (Jan)

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Change in Manufacturing Payrolls (Jan)

Survey -145K
Actual -207K
Prior -149K
Revised -162K

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Change in Manufacturing Payrolls YoY (Jan)

Survey n/a
Actual -7.7%
Prior -5.9%
Revised n/a

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Average Hourly Earnings MoM (Jan)

Survey 0.2%
Actual 0.3%
Prior 0.3%
Revised 0.4%

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Average Hourly Earnings YoY (Jan)

Survey 3.6%
Actual 3.9%
Prior 3.7%
Revised 4.0%

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Average Hourly Earnings ALLX 1 (Jan)

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Average Hourly Earnings ALLX 2 (Jan)

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Average Hourly Earnings ALLX 3 (Jan)

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Average Weekly Hours (Jan)

Survey 33.3
Actual 33.3
Prior 33.3
Revised n/a


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Unemployment increases suicides in Japan

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Very, very sad but true. And not just in Japan.

Restoring output and employment is only a matter of a few spread sheet entries by the government on its own spreadsheet.

Lower interest rates and other forms of ‘monetary policy’ don’t cut it.

What’s needed is a fiscal adjustment large enough to offset the desire of the population not to spend its income.

Operationally, that takes nothing more than debiting and crediting a few accounts on the governments spreadsheet.

Suicides, Homeless Ranks to Swell in Japan as Firms Slash Jobs

by Stuart Biggs and Toko Sekiguchi

Feb 5 (Bloomberg) — Homeless and suicide numbers in Japan may spike as manufacturers including Sony Corp., Panasonic Corp. and Honda Motor Co. fire thousands of workers to cut costs amid the country’s worst recession since World War II, unions said.

Changes in labor law since 1999 have left a third of Japan’s workforce employed on short-term contracts offering little security and no unemployment benefits. Wages are often less than welfare payments and many temporary workers live in company dormitories, leaving newly unemployed also homeless, unions and activists say.

As the number of temporary workers increased, so did poverty levels as 4.3 million, or 8.1 percent of all Japanese households, earned less than 1 million yen ($11,200) in 2007, up from 3.1 million in 2001, according to ministry data.

“It’s totally unstable, unlike anywhere else in the world,” Makoto Kawazoe, an official with the Tokyo Young Contingent Workers Union, said yesterday. “You can’t treat labor like raw materials and expect it to conform to a ‘just in time’ manufacturing system. Labor is live human beings who have to eat and survive.”

Economic woes in Japan historically herald an increase in people taking their own lives in a society that already sees a suicide about every 15 minutes. Fifty-seven percent of the 33,093 who killed themselves in 2007 were jobless, police figures show.

“For political leaders the suicide rate is a sharp warning over policies,” Koichi Kato, a lawmaker for the ruling Liberal Democratic Party, said in an interview this week.

Prime Minister Taro Aso said on Jan. 28 the government will ease regulations barring non-regular workers from unemployment coverage. For example, Japan’s labor ministry plans to reduce the qualification period for benefits to six months in the same job from 12, starting April 1.


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McCain gets this part right

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Problem is, none of them recognize imports are real benefits, exports real costs, so even when they are right it’s for the wrong reason.

Senate rejects move to kill ‘Buy American’ clause, but softens provision

Feb 4 (CBC) &#8212 Senate rejects move to kill ‘Buy American’ clause, but softens provision

The U.S. Senate rejected an amendment put forward by Republican Senator John McCain to strip the “Buy American” provision from the huge U.S. stimulus bill while agreeing to soften the language that had given rise to concerns of pending trade wars.

McCain’s amendment had stated that the “utilization of funds appropriated or otherwise made available by this act shall not be subject to any ‘Buy American’ requirement.” It was voted down 65 to 31 on Wednesday night.

The Senate, however, agreed to water down the language to include a requirement that indicates international trade agreements cannot be violated as a result of the “Buy American” provision.


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McCain petition

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Dear Donna:

I have long been a fighter against wasteful spending in Washington and long an advocate for a balanced budget — that will never change.

    Glad he lost, no deficit is a lot worse than any of the current proposals, even though they fall far short of my proposals:
     

  • Full payroll tax holiday with Tsy making the payments for us.
  • $300 billion to the states on a per capita basis with no strings attached.
  • $8 job funding for anyone willing and able to work.
  • Allow the Fed to lend unsecrured to it’s member banks (demanding collateral is redundant and disruptive with current FDIC arrangements).
  • Implement a strategy to immediately reduce gasoline consumption.
  • This reverses the current slide, and gives Congress time to implement their specific
    proposals in an orderly manner.

I realize we face extraordinary challenges with our economy today, but that is not an excuse for more irresponsibly from Washington. I hope you will join me in saying no to this stimulus package as it currently exists by signing this petition.

Sincerely,

John McCain
Chair, Country First PAC


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