Sanders endorsement, Greece, Passenger transportation services index

A bit of press for my endorsement of Bernie Sanders for President after a chat with Stephanie Kelton which included how they’ve been working together on his economic agenda.

Warren Mosler – An International Leader in Modern Monetary Theory Endorses Bernie Sanders

Varoufakis completely misses the point.

First, the only way public debt, for all practical purposes, need be ‘paid back’ is via refinance.

Second, with the implied guarantee of the ECB’s ‘do what it takes’ policy, rates are down and market forces not applicable for those members ‘in good standing’ and not at risk of losing that ECB support.

Third, Greece, and the entire euro zone, is in desperate need of larger deficits/more public debt, either through tax reductions or spending increases (that choice is political). So even if Greece ‘wins’ on all points currently being negotiated the economy still deteriorates, just at a slower pace.

Fourth, if Greece attempts to go to drachma or any kind of ‘parallel currency’, based on discussion I’ve heard and read, it will most likely be a case of out of the frying pan and into the fire. The expertise required to do it right is not evident at any level.

Varoufakis demands slash to Greek debt

June 15 — Greek finance minister Yanis Varoufakis said that his country desperately needed some of its debts written off if it is ever to pay anything back.

“Only [with debt cuts] can we guarantee the repayment of as much of our debt as possible and actually deliver,” Varoufakis told Bild on Monday.

He claimed that he would immediately agree to further financial aid from the country’s creditors – which he and Prime Minister Alexis Tsipras have until now resisted due to the harsh conditions attached to it – if some of Greece’s debts could be cancelled

Another index in decline:
passenger-trans-services

charts and comments GDP, durables, mtg apps, etc.

>   
>   On Wed, Jun 25, 2014 at 8:52 AM, Sheraz wrote:
>   
>   Very weak US numbers
>   

And not one ‘nice call’ email!!!

And yesterday’s stock market action suggests a possible data leak???
:(

US 1Q GDP has been revised lower by far than expected. After having initially been reported as a 0.1% rise, then a 1% contraction, the third release shows that GDP growth is now reported as -2.9 QoQ% annualised, which leaves annual growth at just 1.5%YoY.



The consensus expectation was for a -1.8% reading. The damage was largely done through the private consumption component, which is now reported as rising just 1% versus 3.1% previously.

Also ‘smoothing’ from numbers that looked high to me in H2 and an adjustment to ACA related healthcare expenses previously booked as PCE:


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Gross private investment remained an 11.7% contraction

Maybe after a Q4 surge due to expiring tax credits?


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while government consumption was left at -0.8%. However, exports were revised down and imports revised up meaning that the contribution from net trade is to subtract 1.5% from GDP growth rather than 0.95% as previously announced.

Reversing a similar, prior blip up, as previously discussed:


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Nonetheless, reaction should be fairly muted given widespread expectations of a sharp bounceback in 2Q14 and the fact that the weather had such a damaging impact on 1Q activity. Indeed, we suspect that we could see GDP rise by more than 5% annualised in 2Q.

And if so, H1 would be +1% :(

High frequency numbers for the quarter have looked good while inventories should also make a significantly positive contribution after having been run down sharply.

After having been run up in H2. We’ll see where they go from here.

And, as previously discussed after the jump up in Q3, inventory accumulation seldom leads a boom:


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Mortgage purchase apps still dismal:

According to the MBA, the unadjusted purchase index is down about 18% from a year ago.


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And May durables not so good either:

Highlights
Durables orders were much weaker than expected for May. Durables orders fell 1.0 percent in May after rising 0.8 percent in April. Analysts forecast 0.4 percent. Excluding transportation, orders slipped 0.1 percent, following a 0.4 percent gain in April. Market expectations were for 0.3 percent.

Transportation fell 3.0 percent after a 1.7 percent rise in April. The latest dip was from weakness in nondefense aircraft. Motor vehicles and defense aircraft orders rose.

Outside of transportation, gains were seen in primary metals, fabricated metals, and “other.” Declines were posted for machinery, computers & electronics, and electrical equipment.

On a positive note, there was improvement in equipment investment. Nondefense capital goods orders excluding aircraft rebounded 0.7 percent in May after decreasing 1.1 percent the month before. Shipments of this series rebounded 0.4 percent after a 0.4 percent dip in April.

The good news is this series is muddling along ok:


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The latest durables report is in contrast to recently positive regional manufacturing surveys and also the sharp jump in manufacturing production worker hours of 0.8 percent for May. But durables data are very volatile and we likely need a couple of more months of data before taking a negative tone on this sector.

The next leg to fall may be employment, as the 1.2 million people who lost long term benefits at year end may have been taking menial jobs at the rate of maybe 75,000/month or more for 6 months or so, which may have front loaded the monthly jobs numbers. If so, monthly job gains may fall into the 100,000 range soon.

So in general it was down for the winter, back up some, and we’ll see what happens next.

The ‘survey’ numbers and professional forecasts look promising, however it still looks to me like we are under the macro constraint of a too low govt deficit that’s struggling to keep up with the unspent income/demand leakages, with scant evidence of help from growth in private credit expansion.

And I tend to agree with Fed Chair Yellen here, which would tend to keep rates lower/longer if she gets her way. However I don’t agree that low rates somehow support aggregate demand, so I don’t see the likelihood of any call from the Fed or other forecasters for the fiscal relaxation I’ve been proposing.

Yellen may be poised to rewrite Fed’s rule book on wages, inflation

June 25 (Reuters) — “My own expectation is that, as the labor market begins to tighten, we will see wage growth pick up some to the point where … nominal wages are rising more rapidly than inflation, so households are getting a real increase in their take home pay,” Federal Reserve Chair Janet Yellen said last week, adding: “If we were to fail to see that, frankly, I would worry about downside risk to consumer spending.” Over the last year Fed staff changed their main model for forecasting wage and price inflation to reflect evidence that companies were adjusting prices more slowly than in prior years.

My immediate proposals remain 1) A full FICA suspension, which raises take home pay by 7.6%, and, for businesses that are competitive, lowers prices as well, restoring sales/output/employment in short order 2) A $10/hr federally funded transition job for anyone willing and able to work to promote the transition from unemployment to private sector employment 3) A permanent 0 rate policy with Tsy issuance limited to 3 mo bills. 4) Unrestricted campaign contributions, however, say, 40% of any contribution goes to the opposition…

Diase Coffelt Release: Gubernatorial Candidate Announces Warren Mosler as Running Mate

Donations appreciated! Please visit our website.

FOR IMMEDIATE RELEASE
April 29, 2014

CONTACT: Maggie Harrell
(340)776-7772


GUBERNATORIAL CANDIDATE SORAYA DIASE COFFELT ANNOUNCES WARREN MOSLER AS RUNNING MATE

St. Thomas, Virgin Islands – Today, U.S. Virgin Islands Gubernatorial candidate Soraya Diase Coffelt announced that she has selected Warren Mosler as her running mate for the position of Lieutenant Governor. Mosler, a renowned financial professional and 11 year resident of St. Croix, is also an independent and has previously run for Delegate to Congress.

Diase Coffelt made the following statement regarding her selection:

“My vision for the Virgin Islands is to develop it into the economic powerhouse of the Caribbean. In order to bring about this economic growth and prosperity, I am seeking qualified and experienced people to join me. I am proud to announce that Warren Mosler has agreed to do so as my running mate. The Office of the Lieutenant Governor is responsible for very important financial issues, including banking, insurance, corporations and trademarks, and property taxes. Mosler is well qualified to execute these duties and help me create a more prosperous future for all of us,” said Diase Coffelt.

“His 40 years of high level experience in financial markets and exemplary management of his investment fund, along with his global achievements in promoting progressive economic policies, have more than demonstrated his capabilities and qualifications for the office. Moreover, he is dedicated to the people of the Virgin Islands and is committed to working with me as a team to fight on behalf of the people, for a better Virgin Islands,” Diase Coffelt concluded.


“This is both a great honor and opportunity,” said Mosler. “Soraya Diase Coffelt has all of the professional qualifications and experience to serve as the next governor. In addition, her integrity and honesty combine to make her – by any measure – the superior candidate for Governor of the U.S. Virgin Islands.”


Candidates Diase Coffelt and Mosler will be actively campaigning on all of the islands, reaching out to voters in each community to meet as many people as possible. They will also hold a variety of public events and meetings, as well as participate in forums and debates.

Thursday meeting with Soraya 7pm at her HQ, the Armrey Cabinets, Richmond, just west of the post office, across the street from WSTX

Thursday meeting with Soraya Diase Coffelt, 7pm at her HQ, the Armrey Cabinets, Jack Bishop’s shop, Richmond, just west of the post office, across the street from WSTX Christiansted

Good meeting last night at the Tamarind Reef conference center! About 35 of you turned out for a high level discussion of
the issues and challenges of moving forward.

Soraya and I will be there Thursday to meet with you all and as many of your friends as you can possibly bring with you!

I can only get the word out though this email list and Facebook, so I’m counting on all of you to each notify as many people as possible, thanks!

In my humble opinion, this is THE team for the ‘better Virgin Islands’ we’d all like to see, and the most important thing to do is simply get the word out!!!

thanks again!

Warren

fiscal update

No talk yet of waiving the sequesters?

McConnell: Stand Firm on Spending

November 19 (WSJ) — With budget negotiations stalled, Senate Minority Leader Mitch McConnell is pushing his GOP colleagues to resist efforts to ease across-the-board spending cuts due to take effect in mid-January. Mr. McConnell has argued it is better to let the cuts take effect than to agree to a budget deal that would allow overall spending to increase or revenues to rise. House Budget Committee Chairman Paul Ryan, also speaking at the Journal event, said he would continue negotiating with Democrats to reach an agreement but didn’t express optimism. Mr. Ryan, who chairs the conference, said if necessary Republicans would pass a bill to keep the government open and allow the sequester’s new spending cuts to take effect.

Ted’s Dad’s sermon

No relation to former Senator Ted Kennedy…

Cruz’ Father Suggests Ted Cruz Is “Anointed” to Bring About The “End Time Transfer of Wealth”

“In a sermon last year at an Irving, Texas, megachurch that helped elect Ted Cruz to the United States Senate, Cruz’ father Rafael Cruz indicated that his son was among the evangelical Christians who are anointed as “kings” to take control of all sectors of society, an agenda commonly referred to as the “Seven Mountains” mandate, and “bring the spoils of war to the priests”, thus helping to bring about a prophesied “great transfer of wealth”, from the “wicked” to righteous gentile believers.”

fuzzy presidential logic

“Also, the White House supports a provision in the deal that strengthens verification measures for people getting subsidies under Obamacare, spokesman Jay Carney said.

Carney called the change “a modest adjustment,” and said it didn’t amount to “ransom” for raising the federal debt ceiling because both sides agreed to it and the White House supported it.”

today’s charts and opinion

Not looking good. And Congress and the President not in any rush either, seems. Still looking to me like they are getting their sense of security from:

The stock market doing ok, believing a balanced budget is a good thing, both sides trying to take credit for this year’s drop in the deficit. Recalling the ‘fear mongering’ in front of the last round of tax hikes and sequesters. Recalling markets bounced back after the Aug 2011 debacle, etc. Voters convinced govt should limit spending to what it takes in.

That is, letting the US go cold turkey to a balanced budget is consistent with their ideology and with current political dynamics.

They are maneuvering only to try to make sure that if it works they get the credit and if it fails the opposition gets the blame.

And I hope I’m wrong!!!

Meeting postponed between President Obama, Congressional leadership

What’s the rush?

Neither side has any interest in ‘compromise’ nor fears going cold turkey to a balanced budget.

In fact, they all believe we owe it to our grandchildren to do exactly that.
:(

Meeting postponed between President Obama, Congressional leadership

October 14 — A meeting between President Barack Obama and congressional leaders to discuss progress toward a deal to re-open the government and raise the U.S. debt ceiling has been postponed to give the Senate more time, the White House said on Monday.

Obama had been due to meet with Senate Majority Leader Harry Reid, Senate Republican leader Mitch McConnell, House of Representatives Speaker John Boehner, and House Democratic leader Nancy Pelosi at 3:00 p.m. The last meeting between Obama and the congressional leaders was Oct. 2.