Monthly Archives: April 2009

Canada has it right

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Flaherty seems to have the fiscal aspects right today.

Anyone know who his advisors are?

Pace of bank remedies too slow, Flaherty says

by Eric Reguly

Apr 3 (Globe and Mail) — “Running large deficits is inflationary, eventually,” Flaherty said. “The spending will end. It is a use-it-or-lose- it proposition.”

Flaherty’s Conservative Party government is facing pressure from opposition parties and business groups to take additional measures to bolster growth in the world’s eighth-largest economy, on top of a two-year, C$40 billion ($32.3 billion) stimulus plan he announced in January.

Flaherty reiterated he’s in no rush to add to his stimulus plan and that Canada, along with other Group of 20 economies, is looking to see the impact of measures already taken. The Finance Ministry and the Bank of Canada will act together against the risk of inflation, Flaherty said.

In an interview with Business News Network today, Prime Minister Stephen Harper said the size of the stimulus is less important than the speed at which money flows into the economy. He said new government spending could end up “crowding out” investments by businesses if it takes place in the middle of a recovery.

“The real issue with stimulus is less size than whether these various stimulus packages are actually going to get out the door,” Harper said.


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Re: dangerous stupidity?

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Reich is right on things replacing demand but doesn’t know operationally how the monetary system works so we winds up losing the debate.

That’s why the media likes to have him on.

>   
>   On Fri, Apr 3, 2009 at 3:10 PM, Roger wrote:
>   
>   Where do they find these people?
>   
>   Unfortunately, on prime time news (& in both political parties)
>   

Robert Reich’s Dangerously Simplistic Economic View

by Joe Weisenthal

Apr 3 (Business Insider) — “Larry Kudlow’s favorite liberal says the key is for the government to replace lost demand. Turns out, there’s no such thing.” [that’s news!]

Listening to newscasters, pundits & politicians is like choosing your poison. Each waves their brand of dangerous simplicity – each of which is precisely wrong, or at best partially right.


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2009-04-03 USER

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Change in Nonfarm Payrolls (Mar)

Survey -660K
Actual -663K
Prior -651K
Revised n/a

 
Karim writes:

  • A 663k drop in payrolls and -86k in net revisions is bad enough
  • The worst of it is the ongoing collapse in hours-the index of aggregate hours down another 1% last month
  • On a work force of 130mm, a 1% drop in hours has the same impact on labor income as a 1.3mm fall in payrolls if total hours were unch
  • The annualized drop in hours in Q1 was -8.7%-assuming 2-3% productivity growth; likely leaves real GDP in -5.5% to -6.5% area
  • Total unemployed, plus marginally attached workers, plus part-time for economic reasons up from 14.8% to 15.4% (16% to 16.2% unadjusted)
  • Only positive was diffusion index up from 21.4 to 22
  • But looking at industry breakdown, hard to find where that improvement came from
    • Manufacturing -161k
    • Construction -126k
    • Retail -48k
    • Finance -43k
    • Temp -72k
    • Govt -5k
    • Education +8k

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Change in Nonfarm Payrolls YoY (Mar)

Survey n/a
Actual -4795.00
Prior -4254.00
Revised n/a

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Nonfarm Payrolls ALLX (Mar)

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Unemployment Rate (Mar)

Survey 8.5%
Actual 8.5%
Prior 8.1%
Revised n/a

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Unemployment Rate ALLX 1 (Mar)

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Unemployment Rate ALLX 2 (Mar)

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Change in Manufacturing Payrolls (Mar)

Survey -162K
Actual -161K
Prior -168K
Revised -169K

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Change in Manufacturing Payrolls YoY (Mar)

Survey n/a
Actual -9.9%
Prior -9.1%
Revised n/a

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Average Hourly Earnings MoM (Mar)

Survey 0.2%
Actual 0.2%
Prior 0.2%
Revised n/a

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Average Hourly Earnings YoY (Mar)

Survey 3.5%
Actual 3.4%
Prior 3.6%
Revised n/a

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Average Hourly Earnings ALLX 1 (Mar)

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Average Hourly Earnings ALLX 2 (Mar)

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Average Hourly Earnings ALLX 3 (Mar)

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Average Weekly Hours (Mar)

Survey 33.3
Actual 33.2
Prior 33.3
Revised n/a

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RPX Composite 28dy YoY (Jan)

Survey n/a
Actual -23.03%
Prior -21.43%
Revised n/a

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RPX Composite 28dy Index (Jan)

Survey n/a
Actual 186.39
Prior 193.05
Revised n/a

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ISM Non Manufacturing Composite (Mar)

Survey 42.0
Actual 40.8
Prior 41.6
Revised n/a


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We are NOT anywhere near a depression!

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Personal Income from 1929-1940


Nothing remotely like this is currently in the cards.

It was the last gold standard collapse.

The US gold standard was abandoned domestically in 1934.


Personal Income from 1940-1945

Nothing remotely like this will happen this time around.

World War II deficits exceeded 20% of GDP annually.

Currently Personal Income is muddling through with flat to modestly positive gains month over month.


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Claims/G20

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Factory orders rise in February

by Emily Kaiser

Apr 2 (Reuters) —The IMF was told its war chest will be boosted by $500 billion and it will receive another $250 billion in special drawing rights, the agency’s synthetic currency.

Multilateral development banks including the World Bank will be enabled to lend at least $100 billion more.

Thanks, IMF funding functions very much much like deficit spending.

Hearing talk of flat q2 GDP.

The great Mike Masters inventory liquidation that triggered the sudden negative growth ended late December.

The rising deficit spending and the new quarter seems to be bringing new buyers into equities and the rest of the credit structure.

The Obamaboom seems in progress- strong financial markets, rising energy costs, and painfully high unemployment.

Hardly the outcome they are shooting for.

Karim writes:

  • Initial claims up 12k to new high for the cycle (4wk avg moves from 650k to 657k)
  • Rise in continuing claims continues to astound-up another 161k this week to another all-time high-cumulative rise in past 4 weeks is 654k
  • May signify upside risk to consensus on unemployment rate tomorrow (consensus at 8.5% vs prior 8.1%)

Some early snippets out of G20:

  • Greater funding for IMF to be targeted at EM countries and trade finance has EM risk on fire in past 24hrs
  • Agreement that OECD will publish list of ‘tax havens’ and that Swiss will be on the black list has Chf quite a bit weaker
  • Russia proposal that IMF or G20 conduct a study on creating a new intl reserve currency generating headlines and some USD weakness; but IMF and OECE both state they see no change in USD status (1 interpretation that Russia went into meeting long Eur/Usd)

New orders received by U.S. factories rose in February, government data showed on Thursday, breaking a six-month streak of declines and bolstering hopes the economy may be beginning to crawl out of the depths of a recession.

The Commerce Department said factory orders rose 1.8 percent in February after a revised 3.5 percent drop in January, initially reported as a 1.9 percent decline.

Economists polled by Reuters had expected a February increase of 1.5 percent.

Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence, jumped 7.1 percent after a steep 12.3 percent drop in January.

Orders for durable goods rose 3.5 percent, revised from the previously published 3.4 percent increase, while orders for nondurable goods edged up 0.3 percent.

Inventories decreased 1.2 percent, down for a sixth consecutive month. That was the longest streak since March 2003-January 2004.


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2009-04-02 USER

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Initial Jobless Claims (Mar 28)

Survey 650K
Actual 669K
Prior 652K
Revised 657K

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Continuing Claims (Mar 21)

Survey 5590K
Actual 5728K
Prior 5560K
Revised 5567K

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Jobless Claims ALLX (Mar 28)

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Factory Orders YoY (Feb)

Survey n/a
Actual -18.8%
Prior -20.5%
Revised n/a

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Factory Orders MoM (Feb)

Survey 1.5%
Actual 1.8%
Prior -1.9%
Revised -3.5%

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Factory Orders TABLE 1 (Feb)

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Factory Orders TABLE 2 (Feb)

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Factory Orders TABLE 3 (Feb)


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UK deficit spending working- household debt repayments up

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Notice how this corresponds to rising public sector deficits as counter cyclical fiscal policy does its thing:

UK Households Step Up Debt Repayments as Recession Deepens

Britons increased the equity in their homes at the fastest pace on record as the recession encouraged households to pay down existing mortgages rather than take out new ones. Individuals injected a net 8 bln pounds ($11.5 bln) into housing equity in the three months through December, the most since records began in 1970, the Bank of England said in London today. The credit crunch and falling house prices are making it harder to borrow against the value of housing. Concerns about job losses are also making homeowners reluctant to add to their 1.5 trillion pounds of debt as they endure the economy’s worst contraction since 1980.

“This is further evidence that households are retrenching sharply, sensibly paring down debt in the face of the credit crunch and fears about unemployment,” Colin Ellis, an economist at Daiwa Securities SMBC Europe Ltd., said in a note. Mortgage equity provided a key source of consumer finance for a decade as Britons used a property boom to finance everything from new furniture to vacations. After tripling in a decade, house prices fell an annual 17.7 % in February, Lloyds Banking Group Plc’s Halifax division said.


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