November 2009

China - The Ultimate Protectionist

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When you hear how the United States doesn't want to be protectionist, please remember that's just spin to ensure we do the will of China.

A new 2009 annual report by the U.S.-China Economic and Security Review Commission is out. Below are selected excerpts that should make the hair on your head stand on end in OMG panic.

China encourages foreign manufacturing to relocate to China and uses strict capital controls to keep the value of the RMB artificially low.

Investors expecting the worst

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Maybe you remember news stories like this from last December, when it seemed the entire world's economic system was about to break down.

Dec. 9 (Bloomberg) -- Treasuries rose, pushing rates on the three-month bill negative for the first time, as investors gravitate toward the safety of U.S. government debt amid the worst financial crisis since the Great Depression.

Negative yields essentially mean that you are paying the government to loan it money. It's a flight to safety at any cost. Last December was the first time it had happened since the Great Depression.

Obama warns on deficit

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This is pretty incredible. A very unpopular Wall Street Bail out, a defocused and ineffective Stimulus and now warns on the deficit.

US President Barack Obama warned that the US economy could head into a “double-dip recession” unless urgent steps were taken to rein in mounting public debt.

The US president’s remarks – in an interview with Fox News in Beijing on Wednesday, towards the end of his eight-day tour of Asia – marked his strongest language yet on the necessity of putting public finances back on a sound footing.

“It is important though to recognise if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the US economy in a double-dip recession,” said Mr Obama.

Alan Grayson amendment to restrict Federal Reserve on Foreign Currency Swaps

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Update: This amendment passed by voice vote.

Frankly, I just don't understand foreign currency swaps. It's above my pay grade.

Yet, we have an amendment, by Rep. Alan Grayson and Ron Paul, to restrict the Federal Reserve on issuing foreign currency swaps.

The amendment restricts the Federal Reserve by requiring five Federal Reserve members of the board of Governors approve as well as the U.S. Treasury Secretary.

The Bank of International Settlements, Switzerland, has written a paper on the U.S. dollar shortage and the international policy response, from what happened by the fall of 2008. Below is a graph of the sudden increased foreign currency swaps issued by the Federal Reserve:

currency FX swaps fed
Src: Zero Hedge, click on image to enlarge

 

Bill Gut Alert - The Audit the Fed Bill is under attack

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What a surprise. There is an attempt to gut the audit the Fed bill:

Rep. Mel Watt, a Democrat from North Carolina, has introduced an amendment intended as an alternative to the measure to audit the Federal Reserve introduced by Reps. Ron Paul (R-Texas) and Alan Grayson's (D-Fla.) . But instead of increasing transparency, as the amendment claims to do, Watt's measure would instead make the institution more opaque.

Right now the House Financial Services Committee is marking up the Financial Stability Improvement Act of 2009.

A bill introduced by Ron Paul H.R. 1207 is now being rewritten as an amendment by Paul and Grayson and will hopefully be added to this large Financial reform bill.

Jukin' The Stats.

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My all time favorite TV series is "The Wire", which ran for 5 years on HBO. Throughout the series, the common thread was the affinity, by the police, the mayor, city politicians and even the drug lords, to "juke the stats". In other words, "tell them what they want to hear", and move on.

In this vein, I've been all over the econoblogosphere today and I'm surprised that this excellent article from Yves Smith hasn't gotten more attention.

Many of us here at EP, and elsewhere, have questioned the veracity of new data eminating from the Census Bureau, the BLS (a.k.a. Bureau of Lying Statistics) and other gov't agencies. In particular, any new reports pertaining to housing, unemployment levels and CPI must be taken with a heavy dose of skepticism.

Advanced Retail Sales - October 2009

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Advanced Retail Sales for October were released yesterday.

While just getting to it today, the headlines screamed retail sales are a blow out yesterday (not all but many).

Here are the numbers:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $347.5 billion, an increase of 1.4 percent (±0.5%) from the previous month, but 1.7 percent (±0.5%) below October 2008.

Total sales for the August through October 2009 period were up 1.5 percent (±0.3%) from the same period a year ago. The August to September 2009 percent change was revised from -1.5 percent (±0.5%) to -2.3 percent (±0.3%).

Recovery? Economic Growth? My Ass!!

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The excellent blog, My Budget 360, has a very interesting and important article today entitled 10 States with Underemployment Rates of 20+ Percent. Manufacturing Sector Employs Same Number of Workers that we did in 1940. It is a hard hitting piece that amplifies concerns raised here on many occasions regarding the ill-effects of globalization. And they have some nice, powerful graphs in support of their arguments.

For instance, on the underemployment issue, consider this data:

One thing that is clear is the employment situation is in a major funk. 10 states now have underemployment rates of over 20 percent. We are talking about Great Depression statistics here:

state unemployement

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