July 2009

Sunday Morning Comics - Michael Jackson Free Zone Edition

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Brought to you by the Michael Jackson CNN Network - Breaking News!   The economic stimulus of Michael Jackson music sales has added 1% to the GDP (and boosted our ratings 4x).
Cup O' Joe

 

Good Morning! Rise and Shine! Get that Cup O' Joe...
break out the O.J....hang out with the pooch...time to check out the Funnies!

 

The State of the Economy, Independence Day 2009 (IV.)

Part I of this series can be found here.

Parts II and III of this series can be read at The Bonddad Blog.

IV. The Federal Government must intervene to Rescue the States, in a morally responsible way

By far, the biggest threat to a bottom being put in to this Recession, is the continuing drumbeat of new layoffs. Thursday's June employment figures over - 450,000 and new jobless claims that have stubbornly, week after week, remained above 600,000, put the kibosh on any idea that the bottom is already here. We simply cannot stand 600,000 people putting in for jobless benefits, week after week after week. And the source of the continuing drumbeat of jobs lost appears to be coming more from anywhere else from the location of what Paul Krugman has called the "50 little Hoovers", i.e., the state (and municipal) governments, which are obliged to balance their budgets and so must throw employees out of work and cut back on spending projects, exactly when they are needed most.

The State of the Economy, Independence Day 2009 (I.)

ABC News reported an interview with with Paul Krugman last week his opinions that:

"I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer," he said June 8 during a lecture in London.

However, Krugman argues people didn't listen to his entire speech, which included dire predictions about lingering unemployment. "There's a big difference between the end of a recession, which is really only when some things start to turn up, and the return to prosperity," Krugman told ABC News. "I think what people don't get is the difference between the end of a recession in a technical sense and actual recovery, which matters to people."

In my opinion, Krugman is exactly correct. In this four-part "Big Picture" look at the economy as of Independence Day 2009, I will argue that:

Friday Movie Night - Big Bucks, Big Pharma Edition

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It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!

 

Since now all news is the Michael Jackson Channel plus health care is assuredly being shaped by insurance company lobbyists, a vein attempt to tie in is this weeks theme. I'm sure if big pharma could figure out a way to market Propofol right now, they would.

Emerging Markets at Record 24% of World Equity, China Snapping up Commodities

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Emerging Markets Take Record Share of World Equity:

Developing countries’ share of worldwide equity value climbed to a record as the fastest- growing economies lured investors amid the first global recession since World War II.

The 22 nations classified as “emerging” by index provider MSCI Inc. comprised 24 percent of world market capitalization, up from 18 percent at the start of this year, the highest proportion since Bloomberg began compiling the data in 2003. China shares surpassed $3 trillion yesterday for the first time since August, from $1.8 trillion at the end of 2008.

So while they pour money into emerging economies the established nations are contracting.

As pointed out previously we have a wealth transfer going on.

Progressive solutions to California's economic crisis

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A lot of virtual ink has been spilled over the on-going economic crisis in California. Lost in the uproar is the fact that 6 other states are also having budget crisis of their own.

Most ideas for solving California's fiscal situation involve draconian cuts and higher taxes. Both are unavoidable at this late date.
However, in every crisis there is opportunity for more radical, progressive, long-term ideas. I would now like to present an idea for comment.

Sweden's Riksbank crosses the Rubicon

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The deflationists must be in shock right now. The Sveriges Riksbank, the oldest central bank in the world, has rejected the very idea of sound money policy.
Today, Riksbank cut Sweden's deposit rate to -0.25%, effectively charging savers interest on deposited money.

Deposit Rate

The decision on the repo rate will apply with effect from Wednesday, 8 July. The deposit rate is at the same time cut to -0.25 per cent and the lending rate to 0.75 per cent.

Of course this will get instantly pushed through the entire banking system.

"It's a double whammy, or even a triple whammy," said Roger Josefsson at Danske Markets.

China and the Dollar

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China is at it once again, to remove the dollar as the world reserve currency and they are bringing their pals, India and Russia to join in.

China will push reform of the international currency system to make it more diversified and reasonable, and to reduce excessive reliance on the current reserve currencies, the People's Bank of China said Friday.

"To avoid the shortcomings of sovereign credit currencies acting as reserve currencies, we need to create an ... international reserve currency that can maintain the long-term stability of its value," the PBOC said.

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