The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for October, 2012

Stephanie Kelton interview

Posted by WARREN MOSLER on 30th October 2012

Interview by Harry Shearer,
looks like someone at NPR is willing to buck the party line:
http://econintersect.com/b2evolution/blog1.php/2012/10/29/stephanie-shelton-explains-money-in-harry-shearer-interview

Posted in Articles | 74 Comments »

The 10th plague brought an end to solvency issues, but not yet output issues

Posted by WARREN MOSLER on 30th October 2012

Interesting how Germany gravitating to negative growth came at about the same time Draghi announced the ECB will ‘do whatever it takes’

With the ECB now taking national govt insolvency off the table, and member nation rates coming down accordingly, the reason for deficit reduction- solvency- has fallen by the wayside.

So now the EU is free to adjust deficits for optimal output without the former solvency concerns.

With austerity, every professional forecaster revises his GDP estimate down and unemployment up.

With a proactive increase in the deficit, whether via tax cuts or spending increases, every professional forecaster revises his GDP estimate up and unemployment down.

And so relaxing the stability and growth pact to maybe a 7% deficit limit from the current 3% limit would result in forecasts for rapidly rising GDP and rapidly falling unemployment. And with the output gap as large as it is the increased economies of scale with expanding output will likely further promote price stability.

Yet it’s not even a passing thought.

So with deficits now likely high enough to support growth from current levels, if they’d only leave them alone, instead, continuing efforts to proactively reduce deficits = continued widening pressure on the output gap.

Posted in Deficit | 66 Comments »

Amazon to publish Soft Currency Economics II

Posted by WARREN MOSLER on 26th October 2012

Should be available by this weekend.

Posted in Uncategorized | 33 Comments »

U.K. Economy Surges 1% as Britain Exits Double-Dip Recession

Posted by WARREN MOSLER on 25th October 2012

Deficit finally large enough for a bit of stability and growth?

U.K. Economy Surges 1% as Britain Exits Double-Dip Recession

By Scott Hamilton and Jennifer Ryan

October 25 (Bloomberg) — Britain exited a double-dip recession in the third quarter with the strongest growth in five years as Olympic ticket sales and a surge in services helped boost the rebound.

Gross domestic product rose 1 percent from the three months through June, the fastest growth since 2007, the Office for National Statistics said in London today. That exceeded the highest estimate in a Bloomberg News survey for growth of 0.8 percent. The median forecast of 33 economists was 0.6 percent. The pound rose after the data were published.

The growth surge reflects a boost from the Olympics and a rebound from the second quarter, when GDP was affected by an extra public holiday. While the data may give some short-term relief to Prime Minister David Cameron’s struggling government, Bank of England Governor Mervyn King said this week that the recovery is “slow and uncertain.” That suggests the figures mask underlying weakness that could warrant further stimulus from the central bank.

“We’re still concerned the U.K. economy is going to be pretty much flat throughout next year,” James Shugg, an economist at Westpac Banking Corp. (WBC) in London, said on Bloomberg Television’s “The Pulse” with Maryam Nemazee. “It all depends how rigidly determined the government is to stick to its deficit reduction plan.”

Ticket Sales

Services, which make up about three quarters of GDP, surged 1.3 percent in the third quarter from the previous three months, the most in five years, the ONS said. Olympic ticket sales are estimated to have added 0.2 percentage points to GDP. Production rose 1.1 percent, the most in more than two years, while manufacturing increased 1 percent. Construction output fell 2.5 percent, a third straight quarterly decline.

The pound extended its gain against the dollar after the report and was trading at $1.6134 as of 10:52 a.m. in London, up 0.6 percent on the day. Bonds declined, pushing the yield on the 10-year government bond up 8 basis points to 1.93 percent.

From a year earlier, GDP was unchanged in the third quarter, the ONS said. That compared with a decline of 0.5 percent forecast by economists in a separate Bloomberg survey.

While today’s data confirm Britain exited its first double- dip recession since 1975, GDP is still 3.1 percent below its peak in the first quarter of 2008. The report also showed that the economy has grown 0.6 percent since the third quarter of 2010, just after Cameron’s coalition government came to power.

Economy ‘Healing’

Cameron urged caution on the GDP data, saying there is “still much to do.” The opposition Labour Party has accused his government of exacerbating the economic slump by sticking to its fiscal squeeze. Ed Balls, Labour’s finance spokesman, said today the economy “remains weak” and “is only just back to the size it was a year ago.”

“There are always one-off figures in all of these announcements but they do show an underlying picture of good and positive growth,” Cameron said. “We’ve got to stick with the program.”

The data today are an initial estimate and the figures are subject to revision when the ONS gets more information. In the second quarter, the decline in GDP was revised up to 0.4 percent from an initially reported 0.7 percent.

Britain is the first of the Group of Seven nations to report GDP data for the third quarter. U.S. growth probably accelerated to a 1.9 percent annual rate after expanding at a 1.3 percent pace the prior quarter, according to a Bloomberg survey before a Commerce Department report tomorrow. It would be the first back-to-back readings lower than 2 percent since the U.S. was emerging from the recession in 2009.

Deficit Reduction

The U.K. data come two weeks before the Bank of England’s Monetary Policy Committee must decide whether to end its stimulus program or extend it beyond 375 billion pounds ($605 billion). Governor Mervyn King said this week that a “zig-zag” pattern of recovery is likely to persist.

Debenhams Plc (DEB), Britain’s second-largest department-store chain, said today that the U.K. experienced “challenging trading conditions during 2012.” Whitbread Plc (WTB) Chief Executive Officer Andy Harrison said the consumer market is “pretty flat” and generating any growth is “jolly difficult.”

Stripping out one-time distortions, the National Institute of Economic and Social Research said on Oct. 9 that third- quarter growth was closer to between 0.2 percent and 0.3 percent.

Inflation Cools

Still, recent data have shown pressure on consumers easing. Inflation cooled to the slowest in almost three years in September, while retail sales increased more than forecast. Payrolls rose to a record in the quarter through August, pushing the unemployment rate down to 7.9 percent from 8.1 percent.

“At this stage, it is difficult to know whether some of the recent more positive signs will persist,” King said on Oct. 23. “The MPC will think long and hard before it decides whether or not to make further asset purchases. But should those signs fade, the MPC does stand ready.”

Elsewhere in Europe, Sweden’s Riksbank kept benchmark interest rates unchanged at their lowest level since early 2011 and said further easing has become more probable as growth slows in the largest Nordic economy.

Posted in CBs, Deficit, GDP, Government Spending, UK | 16 Comments »

CEOs Call for Deficit Action

Posted by WARREN MOSLER on 25th October 2012

So much for the legacy of corporate America:

CEOs Call for Deficit Action

By David Wessel

October 25 (WSJ) — Chief executives of more than 80 big-name U.S. corporations, from AetnaInc. to Weyerhaeuser Co., are banding together to pressure Congress to reduce the federal deficit with tax-revenue increases as well as spending cuts.

The CEOs, in a statement to be released on Thursday, say any fiscal plan “that can succeed both financially and politically” has to limit the growth of health-care spending, make Social Security solvent and “include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.”

Posted in Deficit, Government Spending | 36 Comments »

Does a central bank need equity?

Posted by WARREN MOSLER on 25th October 2012

Just when you thought they were trying to get the yen lower…
;)

It’s still the blind leading the blind, globally.

Does a central bank need equity?

Views are split on how much importance to attach to a central bank’s losses, ie, equity impairments. BoJ Governor Shirakawa says some equity is necessary, but Gakushuin Professor Iwata maintains that the deterioration of the BoJ’s balance sheet is not a problem because a central bank, as the only supplier of high-powered money, can operate without equity. If focusing on a central bank’s “parent company” accounts, equity may not need to be over-emphasized. But considering the possibility of a decrease in the purchasing power of currency holders, it probably has some meaning.

Posted in CBs | 5 Comments »

Bretton Woods Transcripts

Posted by WARREN MOSLER on 24th October 2012

Publication details
The Bretton Woods Transcripts
Edited by Kurt Schuler and Andrew Rosenberg
New York: Center for Financial Stability, 2012
About 800 pages (400,000 words)
Release date: October 24, 2012
Price: $9.00 (e-book)
ISBN-13: 9781941801000

Book Website

Amazon Link

Summary: The Bretton Woods Transcripts were never intended for publication. They give word-for-word reports of many meetings of the 1944 international financial conference in Bretton Woods, New Hampshire. The conference established the International Monetary Fund (IMF) and the World Bank, and began a new era of international economic cooperation that has lasted from the end of World War II to the present. Today we are still grappling with many of the same issues that the conference debated: how to balance the interests of large and small economies, how much power international organizations should have, and how they should work. The Bretton Woods Transcripts show how a previous generation dealt with those issues so successfully that the Bretton Woods conference remains a landmark event.

Posted in Uncategorized | No Comments »

Australia cuts spending to preserve surplus as mining boom slows

Posted by WARREN MOSLER on 22nd October 2012

:(

Australia cuts spending to preserve surplus as mining boom slows

October 22 (Reuters) — Australia’s government announced A$16.4 billion ($17 billion) in new savings and tax measures over four years on Monday to protect a wafer-thin budget surplus for 2012/13, opening the way for the central bank to further cut interest rates as early as next month.

Releasing the government’s mid-year budget update, Treasurer Wayne Swan said GDP growth would be slower in the year to June 30, 2013, and come in at 3.0 percent compared to May’s budget forecast of 3.25 percent, as the country’s mining boom slowed.

Financial markets have priced in up to two more interest rate cuts over the coming months and economists said the extra fiscal tightening could now see the Reserve Bank of Australia ease policy at its policy meeting on November 6.

“The prospect of small budget surpluses means that fiscal policy settings have been tightened a notch. It also means that monetary policy can be further eased without a significant domestic inflation risk,” CBA Economics senior economist Michael Workman said.

A fall in tax revenue, slower economic growth and lower commodity prices led to the downward revision in this financial year’s expected surplus to A$1.1 billion, from May’s budget forecast for a surplus of A$1.5 billion.

Government revenues have also been hit by lower commodity prices, with the controversial mining tax on iron ore and coal mining profits to bring in A$1 billion less this year and A$1.1 billion less the following year compared to the May budget forecasts.

Iron ore prices have fallen around 15 percent, thermal coal 9 percent and coking coal 30 percent since the mining tax started in July, and the government now forecasts the minerals resources rent tax to raise A$9.1 billion over four years, compared to the May budget forecast of A$13.4 billion.

“Global growth has slowed in recent months, with the recession in the euro area and the subdued recovery in the United States weighing on growth in our region,” Swan said.

“The weaker global outlook and lower than expected commodity prices, along with the general easing of price pressures in the economy, are again slowing the recovery in tax revenue.”

Despite the slowdown, Australia remains one of the few developed nations to have forecast a budget surplus for the current year, with net debt peaking at 10 percent of GDP last financial year and well below the average net debt projected to peak at 95 percent of GDP in 2016 for major advanced economies.

The Reserve Bank of Australia has cut official interest rates by 100 basis points in 2012, with the latest 25-point cut in October. Markets are betting on a further rate cut by the end of the year.

The biggest saving in the budget update includes A$8 billion over four years by introducing monthly pay-as-you-go company tax payments for large companies.

It will also raise A$445 million over four years by removing some in-house fringe benefits tax arrangements on salary sacrificing, and raise A$520 million over four years from higher charges for visas to visit and work in Australia.

Australia’s peak business group the Australian Chamber of Commerce and Industry condemned the budget changes and said most of the imposts would be borne by companies.

“Business is again in the firing line when it comes to helping out the budget bottom line,” chamber chief executive Peter Anderson told reporters.

“There is no doubt that many of the decisions in today’s statement will be negative for both households and business, it will be negative for confidence, negative for the economic outlook and negative for economic certainty.”

Swan has delivered consecutive deficit budgets since his first budget in 2008, due to stimulus spending to help Australia avoid recession after the 2008 global financial crisis.

The Labor government, struggling in the polls, is due to face elections in the second half of 2013 and is determined to restore the budget to surplus before it faces the voters, to head off opposition attacks on its economic credentials.

Posted in Government Spending | 26 Comments »

Rimini interview

Posted by WARREN MOSLER on 22nd October 2012

Posted in Banking, CBs, Deficit, Employment, Government Spending | 5 Comments »

Forbes article: No, the US will not go into a debt crisis, not now, not ever

Posted by WARREN MOSLER on 22nd October 2012

>   
>   (email exchange)
>   
>   On Fri, Oct 19, 2012 at 1:09 PM, wrote:
>   
>   Author is self-described conservative.
>   

No, The United States Will Not Go Into A Debt Crisis, Not Now, Not Ever

By Pascal-Emmanuel Gobry

October 19 (Forbes) — If there’s one article of faith in Washington (and elsewhere), it’s the idea that the United States might get into a debt crisis if it doesn’t get its fiscal house in order.

This is not true.

The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars– something that the United States government can produce infinitely and at no cost.

That’s the reason why interest rates on United States debt have only gone down even as the debt has ballooned. That’s the reason why Great Britain has very low rates on its debt despite having very high debt-to-GDP. That’s the reason why Japan has an astounding debt-to-GDP ratio and still enjoys some of the lowest rates ever. Investors have bet for so long that there would be a run on Japanese debt and have ended up so ruined that in financial circles that trade is called “the Widowmaker”. (Here’s a more detailed analysis by my former colleague Joe Weisenthal at Business Insider.)

Well, what about Argentina? Argentina had to default on its debt because it had pegged its currency to the US dollar. It wasn’t sovereign with regard to its currency since it had to maintain its currency’s peg. It wasn’t Argentina’s debt that caused it to default, it was its currency peg.

What about Greece? Same thing. Greece hasn’t used its own currency for ten years. Of course it’s going bankrupt.

Does it seem that strange that governments can’t run out of money?

You don’t have to take my word for it. How about Alan Greenspan? He said (PDF): ”[A] government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.”

But waaaaaaait, you shout, what about inflation? If the government prints money like crazy, won’t that create inflation?

Well, in theory, yes. But probably not. Why is that? Because the US has an even bigger advantage than just being sovereign in its own currency (hi Greece), it also holds the reserve currency. The US dollar is the main currency that is used in most international transactions, it is held by all of the world’s central banks, and so forth.

Why is this important? Well, another way to define inflation is to say that the supply of a currency gets out of whack with its demand: too much currency chasing too few people who want to hold it, and so its value drops. Well, when you have the reserve currency, the demand for your currency is always going to be extremely strong. There’s always going to be tons of people, all around the world, who want to use US dollars, because their transactions are conducted in US dollars. (And it’s highly unlikely that this will change soon–being the reserve currency has a network effect, meaning everyone uses the dollar as the reserve currency because everyone else uses it, creating a self-reinforcing cycle that’s extremely hard to break.)

In other words, while in theory printing tons of money could create inflation, in practice demand for the dollar is so high–and for structural reasons that have very little to do with how the US economy is doing at a particular point in time–that it’s hard to imagine a circumstance under which the US government would have to print so much that it would cause significant inflation.

And even if it did–well, for all the bad memories we have about it, the Stagflation of the 1970s was many things, but it was not Greece. Life in the 1970s was still relatively okay, despite the stagflation. That is to say, even in the extremely unlikely event that the government had to print so much money to get out of its debt that it caused moderate inflation, it still would not be a debt crisis of the kind that Greece and Spain are under right now. (Hyperinflation, meanwhile, is even less of a danger, since in recorded history it only happens in cases of not just reckless money printing, but also extremely serious exogenous shocks such as war, regime change, etc.)

Why am I writing this?

After all it’s already common knowledge among economists, Fed officials, and an increasing number of sophisticated investors.

Maybe so, but it’s still not common knowledge among politicians and among the general public. A lot of people still think that the US is under some risk of one day becoming like Greece, and it’s distorting our public debate.

It’s especially distorting it on the Right, where hysteria about deficits, and debt, and becoming like Greece has reached a fever pitch. Paul Ryan, especially, has framed his entire message on entitlement-cutting on the flawed premise that the US needs to cut its entitlement or it will suffer a debt crisis. This message, in turn, has infected broad swathes of the conservative movement (including very smart people in it), a movement that I consider myself a member of and want to see in strong intellectual health. But very few liberals–certainly no Democratic elected officials that I’m aware of, certainly not the President and the Vice President–are disputing the premise that the US is in any danger of a debt crisis.

In future posts, I will try to look at what the conservative movement can do to move past the idea of the debt crisis, and what it means.

Posted in Currencies, Deficit, Government Spending | 40 Comments »

Video of Columbia Seminar is Live

Posted by WARREN MOSLER on 17th October 2012

Posted in Banking, CBs, Currencies, GDP, Government Spending, Inflation | 185 Comments »

Mosler for Congress update

Posted by WARREN MOSLER on 14th October 2012

I sent the following to my international audience looking to a return to prosperity
for all of us, which I now send along to you here in the USVI to keep you well informed!

(note that ‘closing the output gap’ means ‘eliminating unemployment’)

They have known me for a very long time and have been most supportive:

First let me thank all of you who have contributed, and have become part of what could quickly become much more than just another seat in Congress!!!

Donations have exceeded $25,000 and at only $25/minute for radio and TV adds the incremental spending has indeed made a difference- thanks again!

There are three weeks to go an any additional contributions will immediately be used to add to the advertising and promotional efforts.

When I ask our volunteers ‘out of ever 10 people they speak to in their neighborhoods, how many say they are voting for me’ they all say more than half!

Friday in St. Thomas while walking to a UVI event I heard a loud ‘Mosler!’ and looked over to see a patrol car with the window down and the officer looking at me. As soon as I turned his way he said ‘Everyone’s voting for you this time, you’re going to win you know!’

I’ve been in 5 ‘debates’ so far, with the candidates on a panel taking questions from a moderator. I’ve just focused on what I’m going to do about each issue, both for the national economy and the USVI economy, while the other candidates have had no specific agenda apart from promising to work hard (and taking cheap shots at each other, of course!)

More and more the audiences seem to be responding with ‘your the only one who knows what to do’. And the ‘anti incumbent’ feeling in general is actually alarmingly high as conditions here continue to deteriorate. Our cost of electricity, for example, just went up to over 50 cents/kw, while government salaries that were already half the national average were cut 8%, with thousands of lost jobs due to the closing of the Hovensa refinery here on St. Croix and widespread government layoffs of nurses and teachers in an already grossly under served community.

I assure you that if I get in Washington will soon be aware of the hurricane that’s come up from the USVI. The Fed chairman will suddenly face ‘innocent’ questions of profound magnitude, such as, ‘Isn’t true that a $trillion deficit adds exactly that much to global dollar net savings, and not a penny less or a penny more, or these two gentlemen next to me from the CBO would have stay late at work looking for their arithmetic mistake?’ ‘Isn’t it true, that by your own regulatory standards, loans to the ECB collateralized with euro deposits would be classified as unsecured loans?’ ‘Given that you do the actual spending on behalf of Congress simply by crediting accounts, and therefore ability to pay, insolvency, and prior funding for Congress, unlike for Greece, is never an issue, and, again unlike Greece, for all practical purposes the Fed sets US interest rates by voting and not the market, what then, is the short term or long term risk posed by deficit spending? And many more. And with all of these questions serving the agendas of various members of Congress there is every incentive for them to be asked. And not to mention testimony and discussions on banking, budgets, and trade. Looking forward to gettng the job done/close the output gap!!!

If any of you want to contribute to ‘THE CAUSE’ remember the limit is $2,500 per person and checks can be made out to ‘Mosler For Congress 2012′.

You can also click here or paypay and further information.

All the best!!!

Warren

Posted in Deficit, Employment, GDP, Government Spending | 57 Comments »

Romney to Take China ‘to the Mat’ on First Day in Office

Posted by WARREN MOSLER on 14th October 2012

I can’t even read this stuff any more.

And, worse, it ‘forces’ his opposition to take a harder stance as well.

Romney to Take China ‘to the Mat’ on First Day in Office

October 14 (Reuters) — Republican presidential candidate Mitt Romney on Saturday accused President Barack Obama of failing to “stand up to China” after the U.S. Treasury put off releasing a politically sensitive report on the currency policies of major U.S. trading partners.

“Four years after promising to take China ‘to the mat’ for its manipulative currency practices, President Obama has once again failed to live up to his word,” Romney spokeswoman Andrea Saul said in a statement released by the campaign office.

“We can’t afford another four years of President Obama’s failure to stand up to China. Mitt Romney will do it on day one of his presidency,” she said.

Posted in China, Currencies | 31 Comments »

Swiss Central Bank Chief: Currency Intervention Rescued Economy

Posted by WARREN MOSLER on 14th October 2012

Yes, as it reduced demand in the euro zone

Swiss Central Bank Chief: Currency Intervention Rescued Economy

October 12 (Nikkei) — A year after the Swiss National Bank made a direct intervention in the the foreign exchange market to halt the overvaluation of the Swiss franc, Chairman Thomas Jordan told the Nikkei in a recent interview that the move helped to stabilize the country’s economy and stave off deflation.

Posted in Currencies | 6 Comments »

French Industrial Production Unexpectedly Rose 1.5% in August

Posted by WARREN MOSLER on 10th October 2012

I know it’s a stretch at this point, but I keep looking for evidence their budget deficits are large enough to support GDP at current (depressed) levels.

And yes, further austerity works against this.

French Industrial Production Unexpectedly Rose 1.5% in August

October 10 (Bloomberg) — French industrial production unexpectedly rose in August, driven by manufacturing of transport equipment. Production gained 1.5 percent in the month from July, Insee said.

Italian Industrial Output Unexpectedly Rises 1.7% in August

October 10 (Bloomberg) — Italian industrial production unexpectedly rose in August. Output rose 1.7 percent from July, when it contracted a revised 0.1 percent, Istat said. Production fell 5.2 percent from a year earlier on a workday-adjusted basis, the 12th annual decline. The euro region’s third-biggest economy will probably contract 2.4 percent this year and 0.2 percent next, the government said last month. Industrial production fell 0.9 percent in the third quarter from the previous three months, employers lobby Confindustria predicted on Oct. 1. Output declined 0.3 percent in September from the previous month, according to the survey. Istat had originally reported a 0.2 percent drop industrial production in July.

Same goes for the UK:

U.K. Third-Quarter GDP Jumps the Most in Five Years, Niesr Says

October 10 (Bloomberg) — The U.K. economy grew at its fastest pace in five years in the third quarter after a rebound from one-off disruptions in the prior three months, the National Institute of Economic and Social Research said. Gross domestic product rose 0.8 percent, compared with 0.1 percent in the quarter through August, Niesr said. Underlying growth was weaker than suggested by the headline number, Niesr said. Stripping out distortions stemming from June’s extra public holiday for Queen Elizabeth II’s Diamond Jubilee, it measured the economy’s pace of expansion as closer to between 0.2 percent and 0.3 percent. “The strength of the figure for the three months to September is largely an artefact of special events,” it said.

Posted in EU, GDP, Government Spending, UK | 17 Comments »

Turkey Masses Troops on Syrian Border; Syria Slams Turkey

Posted by WARREN MOSLER on 9th October 2012

This is very serious.

And if Turkey intervenes and topples the regime it may be a case of out of the frying pan and into the fire.

Turkey Masses Troops on Syrian Border; Syria Slams Turkey

By Selcan Hacaoglu

October 9 (Bloomberg) — Turkey’s top general inspected newly deployed units on the Syrian border Tuesday following six days of firing by Turkish batteries against President Bashar al-Assad’s forces.

Turkey has deployed additional tanks, howitzers, and missile defense systems on the border since a Syrian artillery shell killed five people in the town of Akcakale on Oct. 3, prompting parliament to give the government a one-year mandate to send forces into Syria if necessary.

General Necdet Ozel, chief of the general staff, today inspected troops in Hatay province, which was hit by seven artillery shells or mortar rounds in the past week, state-run TRT television said.

General Hayri Kivrikoglu, chief of the land forces, accompanied Ozel along with several other senior officers, the state-run Anatolia agency said. Ozel will inspect troops in Akcakale tomorrow, TRT television said.

Tensions between the two countries have risen during the 19-month rebellion against Assad’s government, with Turkey offering support to the rebels.

These worsened in June, when Syria shot down a Turkish warplane it said was in its airspace and on Oct. 3, when the Syrian shell fired over the border killed two women and three children in Akcakale, triggering the cross-border exchanges.

Foreign Minister Ahmet Davutoglu told state-run television on Oct. 6 that Syrian Vice President Farouk al-Sharaa hadn’t taken part in massacres and could serve as interim leader if Assad leaves office.

‘Confusion, Blundering’

Syria’s Information Minister Omran al-Zoubi said yesterday that Davutoglu’s remarks reflect “obvious political and diplomatic confusion and blundering,” Syria’s state-run SANA news agency said.

“Turkey isn’t the Ottoman Sultanate; the Turkish Foreign Ministry doesn’t name custodians in Damascus, Mecca, Cairo, and Jerusalem,” he said.

Syrian forces have continued firing at rebels along the border even though Turkey has responded to artillery shells or mortars landing inside its territory.

At least 27 schools along the border areas in Akcakale remain closed due to fears they could be hit by an errant shell, Anatolia said today.

The two countries share a 911-kilometer (566 miles) border. Turkey, a member of NATO, has a 720,000-strong military, the second-largest army within the alliance.

Deputy Prime Minister Bulent Arinc said late yesterday that although Turkey has no intention to go to war with Syria, it is determined to use the mandate if needed.

‘Solid Ground’

“Concerning Syria, primarily in the face of international law, Turkey will continue to walk on solid ground,” Anatolia quoted Deputy Prime Minister Ali Babacan as saying during a news conference today.

Turkey shelters nearly 100,000 Syrian refugees in 15 camps along the frontier. Syria says Turkey lets rebels use the camps as a safe haven.

More than 30,000 people have died in Syria since the rebellion against Assad began in March 2011, according to the British-based Syrian Observatory for Human Rights.

The Local Coordination Committees in Syria said 31 people have died so far today, including 28 in Damascus and its suburbs.

Posted in Uncategorized | 45 Comments »

Naimi Says Saudi Arabia, Gulf States Seeking Stable Oil Prices

Posted by WARREN MOSLER on 9th October 2012

This reads a lot like the Saudis have about run out of excess capacity?

Naimi Says Saudi Arabia, Gulf States Seeking Stable Oil Prices

By Deema Almashabi and Glen Carey

October 9 (Bloomberg) — Saudi Arabia, the world’s biggest exporter of crude oil, will help meet demand “fully” and will work with other member states of the Gulf Cooperation Council to try to stabilize prices, Oil Minister Ali al-Naimi said.

“We will work towards moderating the price,” al-Naimi told reporters in Riyadh today ahead of a conference of oil ministers from the council’s six members. “We will meet the market demands fully.”

Crude for November delivery climbed as much as $1 to $90.33 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.93 at 5:09 a.m. local time. Brent oil for November settlement gained 81 cents, or 0.7 percent, to $112.63 a barrel on the London-based ICE Futures Europe exchange.

Saudi Arabia is the largest nation in the GCC, a political and economic confederation that includes Kuwait, Qatar and the United Arab Emirates. The four states belong also to the Organization of Petroleum Exporting Countries. The GCC’s other members are Bahrain and Oman. Together, the council accounted for 24 percent of worldwide crude supply in 2011 and 30 percent of total reserves, according to BP Plc’s Statistical Review of World Energy, published in June 2012.

“Oil prices rose in March to levels not seen since 2008, which may adversely affect the global economy, particularly the economies of developing and emerging countries, as well as negatively impact global oil demand,” al-Naimi said in a speech at the conference.

“We continued our policy of allaying market fears, providing supplies when needed and limiting high price fluctuations during the ensuing months till this present day,” he said.

Posted in Comodities, Oil | 5 Comments »

employment report

Posted by WARREN MOSLER on 9th October 2012


Karim writes:

In the FAQ section of the BLS website:
Why are there two monthly measures of employment?

The household survey and establishment survey both produce sample-based estimates of employment and both have strengths and limitations. The establishment survey employment series has a smaller margin of error on the measurement of month-to-month change than the household survey because of its much larger sample size. An over-the-month employment change of about 100,000 is statistically significant in the establishment survey, while the threshold for a statistically significant change in the household survey is about 400,000. However, the household survey has a more expansive scope than the establishment survey because it includes the self-employed, unpaid family workers, agricultural workers, and private household workers, who are excluded by the establishment survey. The household survey also provides estimates of employment for demographic groups

Other features of the HH survey are that it is MUCH more volatile and it is also never revised.

Last 3mths of data:         Jul   Aug      Sep       Avg
HH Survey                     -195k  -119k  +873k +186k
Establishment Survey +181k  +142k +114k +145k

So despite often showing opposite signs month to month, over time these series tend to send the same message.

In terms of the data yesterday, a big chunk of the gains in the HH Survey came in part-time employment and in the 16-24 age group. One explanation is many students who went back to school also picked up jobs.

Fed Impact
First, count me as among those who think there is 0 chance these numbers were manipulated. For the Fed, for the reasons the BLS explains above, they look at both indicators, though they favor the payroll survey due to its greater sample size. Bigger picture the two indicators both tell a story of modest improvement in the labor market. Not the ‘significant’ improvement the Fed is looking for. The quirkiness of the monthly data is also why they have a tough time with specific numerical objectives on the unemployment rate, instead favoring the ‘we’ll tell you when we get there’ approach. So full steam ahead for QE3, especially as we journey closer to the edge of the fiscal cliff.

Posted in Employment | No Comments »

Cameron and Draghi continue to push austerity

Posted by WARREN MOSLER on 9th October 2012

I wonder what, if anything, it would take to reverse all this self inflicted global destruction.

Clearly evidence and theory isn’t enough.
Too often change comes from some form of ‘blood in the streets’

Draghi Says No Alternative to Austerity as Economies Shrink

By John Fraher and Jeff Black

October 9 (Bloomberg) — European Central Bank President Mario Draghi said there is no alternative to austerity as Italian and Spanish officials balk at asking for bailouts that may impose more budget cuts.

“It’s without doubt that the process of fiscal consolidation has depressed output in parts of the euro area,”

Draghi told lawmakers in testimony to the European Parliament in Brussels today. “But what’s the alternative? We need to do that, we need to do that in the best possible way, as effective and as short as possible, complying with basic grounds of social justice.”

European officials are pushing debt-strapped nations across southern European for more cuts despite the risk that they will worsen recessions gripping the region. Draghi last month said that the ECB is prepared to take the unprecedented step of buying unlimited quantities of Spanish and Italian bonds if they sign up to certain conditions.

At the same time, Italian Prime Minister Mario Monti said in an interview last month that uncertainty about what those terms will look like is making him and his Spanish counterpart reluctant to apply for help.

International Monetary Fund Chief Economist Olivier Blanchard today suggested bond yields in Spain and Italy may resume rising if the countries don’t meet investor expectations and seek aid.

Cameron Says U.K. Needs to Implement Plan A Plus on Economy

October 9 (Bloomberg) — Prime Minister David Cameron said the U.K. government needs to implement an economic policy that he called “Plan A Plus,” without abandoning its deficit-reduction strategy.

Cameron was speaking after the International Monetary Fund cut its U.K. economic outlook and said the government may need to ease its fiscal squeeze if Bank of England stimulus fails to help the economy gather momentum. The Washington-based lender said today it sees the economy shrinking 0.4 percent this year before expanding 1.1 percent in 2013. It previously projected growth of 0.2 percent and 1.4 percent in those years.

“What we need is Plan A Plus” Cameron told Sky News television today from his Conservative Party’s annual conference in Birmingham, central England. He said that means pursuing deficit reduction alongside adopting fiscal measures to help businesses as well as easing planning rules to spur enterprise.

His opponents in the Labour Party have called on Cameron to reduce the speed and depth at which he is imposing government spending cuts, saying the government should alter its course to a “Plan B.”

The IMF is “not advising us to change course,” Cameron told BBC Radio 5. “What they says is we should stick to our plans unless things get dramatically worse.”

He said that while “there are signs that the economy is rebalancing,” including an increase in private-sector employment, “we need to do more and we need to do it faster.”

Healing Process

The prime minister said the IMF’s move meant it was falling into line with other forecasters, underlining the need for the government to ensure that its plans to spur growth are “firing on all cylinders.

Speaking to BBC Radio 4’s “Today” program, Cameron said the government is doing everything it can to encourage growth and a “slow and difficult healing process” is now under way.

He said there will be a new crackdown on tax evasion and “aggressive avoidance,” when asked to give details of his promise to take further action to increase taxes on the rich.

Chancellor of the Exchequer George Osborne told the party conference yesterday the U.K. economy is “taking longer” to heal than hoped. Still, he pledged to “finish the job” of reducing the deficit and signaled that deep cuts to welfare will be needed after the next general election in 2015.

Cameron Says IMF Forecast for U.K. Coming Into Line With Others

October 9 (Bloomberg) —Prime Minister David Cameron said the International Monetary Fund’s decision to cut its economic outlook for Britain meant the IMF was falling into line with other forecasters.

Cameron told BBC television from his Conservative Party’s annual conference in Birmingham, central England, that the goverment needs to ensure that its plans to spur growth are “firing on all cylinders,” rejecting calls for more borrowing to fund extra spending. He pointed to an increase in private- sector employment as a sign that the government’s policies are working.

Posted in Government Spending, UK | 7 Comments »

Saudi output

Posted by WARREN MOSLER on 3rd October 2012

Demand for Saudi crude remained high as they post price and let quantity adjust.

So it looks like they are trying to keep prices in check even with demand getting reasonably close to their capacity limits.

And it’s not illegal for them to set the price of oil to best support their candidate of choice.

Posted in Oil | 9 Comments »