February 2011

Bernanke's Intrigue?

By Numerian
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Does Ben Bernanke even know what he is doing? I've certainly wondered about that point, and it is increasingly a topic of conversation among stock market analysts who have come to understand that all the major US stock market indexes are pushing relentlessly upward because of the Bernanke put.

There hasn't been a significant correction in the stock market since early September, when the S&P 500 left the 1040 range to its present very lofty height of 1330. This rally has set a number of records, including days when the stock market moves less than 1%, and number of stocks above their 200 day moving average. While some analysts credit this advance to improving economic conditions, most observers point to the Fed's deliberate policy to keep the stock market "higher than it would otherwise be", fueling it with hundreds of billions of dollars from the quantitative easing program.

Egyptians Revolt - Rubin's Folly and Labor Arbitrage

By Numerian
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The forces of globalization are increasingly and in surprising places and ways under attack. Globalization did not happen by accident; it was the result of policies put in place by people with a particular agenda.

Matt Stoller, a former policy advisor to Rep. Alan Grayson, has posted this morning his insights into the Egyptian Revolution – insights that are quite different from the usual take on these events. They can be found here at the Naked Capitalism blog managed by Yves Smith.

Stoller dismisses the fanciful praise of social networks as a driving force behind the revolution – a story the mainstream media are plugging rigorously. He focuses instead on the participation of young men and women who labor anonymously in the new cheap-labor factory mills set up in Egypt under the direction of Gamal Mubarak, the president’s son and anointed successor. These are the workers who organized the first protests – who responded at great risk to the call for demonstrations, who continued to occupy Tahrir Square despite the provocations from the government, and whose focus on civil liberties was motivated by the repressive police tactics used by the government to enforce the discipline demanded by the mostly-foreign corporations that run the labor mills.

China Trade Surplus for January 2011

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The headlines blare China's trade deficit shrunk, yet what does that mean for the United States and it's massive deficit with China?

Imports jumped 51% from the year-ago period, while exports grew by 37.7%, according to reports citing official data released over state television Monday.

While reports show China's trade surplus was cut by half, from $13.1 billion to $6.5 billion, unless those imports come from the United States, a 37.7% China export increase from a year ago is not good news for America.

The United States is China's biggest export destination, so odds are those exports are coming here. Notice China reports only two way trade, but most of the trade with the U.S. is one way and that is China exporting to America.

More of the rise in imports is due to increasing commodity prices:

he average price of imported iron ore was more than US$151 per ton, rising 66 percent year-on-year, while bean prices rose 20.4 percent.

The China State Press has a different take and notes China's trade activity has surged 44% from one year ago.

The European Union remained China's largest trade partner in 2010, with EU-China trade up 30.5 percent year on year to 45.97 billion U.S. dollars.

Budget Fight Preview

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The President's budget proposal will not be released until February 14, 2011, yet the leaks and politics are spewing into the Internet beltway.

The budget proposal will recommend ending Bush-era tax cuts for the highest earners when they are set to expire at the end of 2012, though the White House didn't include the projected revenue from this in its budget forecasts. The budget projections are based on the administration's economic forecast which shows a recovering economy, but it was made before the December tax-cut compromise which, most private forecasters say, has boosted the near-term growth outlook. Faster growth could mean higher government tax revenues and a smaller deficit.

Many of the spending cuts or reductions in the budget are already known. It would, for example, freeze levels of domestic non-defense spending for five years, something the White House believes will save $400 billion.

The White House will also propose reductions to a number of federal programs, from the U.S. Forest Service to a program that provides heating assistance for low-income families. It will adopt previously recommended reductions in military spending that would reduce costs by $78 billion over several years. The budget proposal will also recommend targeted spending increases, particularly in education and infrastructure programs.

We have a cut off for heat to the poor, charging interest on student loans while that person is still in school, a comment that maybe we should tax the rich, after just giving the rich a massive tax break.

Greece Calls Out IMF

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Greece is growing a spine. Seems the EU and the IMF are demanding Greece sell off their public assets, and in response to these demands, Greece said:

"The behavior of the representatives of the EU, IMF and ECB during yesterday’s press conference was unacceptable,” government spokesman George Petalotis said in a statement today, referring to the European Central Bank. “The only agent responsible for these decisions is the Greek government. We take orders only from the Greek people.”

Associated Press:

It was the first time the government has publicly struck back at the IMF and the European Union, which rescued Greece from bankruptcy but at a price that many Greeks consider too harsh.

The IMF, the European Central Bank and the European Commission delegation said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat. The IMF representative also said some of the frequent demonstrations against the Greek government's reforms were being carried out by groups angry at losing their "unfair advantages and privileges."

Just incredible and good for Greece. The IMF is pushing their austerity program, which is privatization and reductions in pensions, social safety nets for workers, who I guess are those of unfair advantage and priviledge.

Saturday Economic Reads Around The Internets for February 12, 2011

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shocknews
Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.

Overnight Food Inflation in the United States

We have a massive crop failure in Mexico, from last week's deep freeze. 80-100% crop loss. Zerohedge has a good overview on the latest. From The Packer:

“On Feb. 8, the U.S. Department of Agriculture reported prices of $22.95-24.95 for two-layer cartons of 4x4, 5x5 and 5x6 vine-ripe field-grown tomatoes from Mexico, up from $6.95-9.95 the week before and $5.95-7.95 the year before.”

Amazing this story isn't front page news. From a local news station in Oregon:

Get ready to pay double or even triple the price for fresh produce in the coming weeks after the worst freeze in 60 years damaged and wiped out entire crops in northern Mexico and the southwestern U.S.

The problem started less than a week ago, when our nation was focusing on the Superbowl and sheets of ice falling from Texas Stadium.

Farmers throughout northern Mexico and the Southwest experienced unprecedented crop losses. Now devastation that seemed so far away, is hitting us in the pocketbooks.

Trade Deficit for December 2010 - $40.6 Billion

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The December 2010 U.S. trade deficit increased $2.3 billion to $40.6 billion. $25.3 billion of this deficit is oil related. For the year, the trade deficit is -$497.8 billion, a trade deficit increase of -$122.9 billion, or 32.8% increase, in comparison to 2009. Oil related trade was -$265 billion of the total yearly 2010 deficit, or 53.2%.

Forces Behind the Egyptian Revolution

By Michael Collins

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(Washington, DC) Two critical forces behind the Egyptian Revolution are missing from the front pages, or any pages, of the corporate media. They are the critical role of Egypt's union movement and the universal desire of all people to live in peace, freedom and dignity. Rarely mentioned are the grievances of Egypt's workers and their struggle to unionize. As a result, we've missed the connection between the struggle to unionize and the right to assemble.

The Egyptian people were poised for a mass celebration following what was supposed to be a farewell speech by former President Hosni Mubarak. For seventeen days, Egyptians massed in Cairo's Tahrir Square. There were protests in Alexandria, Port Suez, and other cities. The G-20 sates have been tentative in their support for the full set of demands by protesters and the broader Egyptian public. For example, President Barack Obama said Mubarak needed a, "credible, concrete and unequivocal path to democracy." What does a "path to democracy" look like? How long does it take to walk the path? Egypt's military leaders may have acted already.

Plus an extended comment on Iran's demonstrations

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