COLLECTIVE MADNESS


“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Saturday, January 10, 2009

Why China Purchases US Debt


To understand why China purchases US debt one has to look at the manufacturing and distribution model. A totally vertically integrated company, or for that matter, a country would manufacture and sell its products directly to the consumer.

Each stage of the process would have a cost and would require a profit. A farmer would raise his own eggs and sell (trade) his surplus to his neighbor. That was how commerce began. There was no such thing as outsourcing. All costs and profits, or losses were born by the farmer. Modern society is far different.

The manufacturing and distribution process has evolved into specialists who manufacture, distribute or sell products. When China decided to get into the game of world commerce, she assessed her structural weaknesses and strengths. The US was a powerhouse of distribution and sales. It simply was not possible for China to set up a retail or wholesale distribution in the US which represented almost a third of global consumption.

Chinese strength rested in low cost manufacturing. Low cost manufacturing can be dependent on well chosen capital or intensive use of low cost labor. China used low cost labor to build capital.

The huge US market was open to China and welcomed low cost Chinese produced goods. US branding of products could easily allow retailers to sell American named goods produced in China.

A $90 Black and Decker appliance, made in China, could be sold for $80 to a consumer with a greater profit to the retailer than a US produced unit. China made the product and gleefully took the dollars. The Question was what to do with them?

The Chinese had little need for US products but a huge need for the dollars. The currency generated could be redeployed globally through banking, distribution, construction or for internal financing of capital or infrastructure. China bought US securities with the trade dollars because there was nothing better or smarter for them to buy. They bought a lot of securities because they had the excess cash from export.

Today China will buy US securities based upon its trade with the US. If the US slows in buying Chinese goods, China will buy fewer US securities because it has fewer dollars. If China needs more money for internal consumption, it may have to sell US securities to raise cash.

China will not be selling or refusing to buy US securities because they are mad at us. If China wants to sell in the US, it must take dollars and either spend them or invest them. There is no other way.

_______________________

U.S. Rates to Stay Low as China Cuts Debt Purchases


By Kevin Hamlin and Judy Chen

Jan. 8 (Bloomberg) -- U.S. Treasury yields are unlikely to climb significantly should a decline in China’s foreign-exchange reserves force the nation to scale back purchases of the securities, according to Fitch Ratings Ltd.

The New York Times reported yesterday that China is losing its appetite for debt from the U.S. and said this could have “painful effects for American borrowers.” Demand for Treasuries remains robust with investors shifting out of riskier assets, and yields on 10-year bills are close to historical lows, said James McCormack, the Hong Kong-based head of Asian sovereign ratings at Fitch.

“China is going to buy less Treasuries but only because foreign exchange accumulation is not going to be so large,” he said. “It’s not as though they are shying away from Treasuries and buying something else.”

China’s currency reserves, the world’s largest at about $1.9 trillion, recently fell for the first time in five years, Cai Qiusheng, who works for the State Administration of Foreign Exchange, said last month. With less dollars flowing into the country, China’s need to buy U.S. debt is reduced.

The total amount of U.S. government debt outstanding rose to $10.7 trillion in November, from $9.15 trillion a year earlier, as the government bailed out financial companies. President-elect Barack Obama, who takes office on Jan. 20, is pressing Congress to approve an economic stimulus plan of about $775 billion over two years.

Global Recession


“The likely scale of China’s reduced purchases will not be enough to overwhelm other global factors that are pushing down rates,” said Brad Setser, a fellow at the Council on Foreign Relations in Washington.

The yield on the benchmark 10-year Treasury note was recently at 2.50 percent, compared with an average 3.64 percent last year. It reached a record low of 2.0352 percent on Dec. 18 as recessions in the U.S., Europe and Japan boosted demand for the safest assets.

U.S. Deputy Secretary of State John Negroponte downplayed questions about potential conflict over how China handles its holdings of Treasuries while visiting Beijing today.

“My Chinese interlocutors pointed out that they have been very responsible in dealing with the question of the American debt that they do hold, and they want to be viewed as a reliable partner in that regard,” he told reporters at a press conference today in Beijing.

Deepening Crisis

Zhu Guangyao, the Chinese Assistant Finance Minister, said on Dec. 5. that China may continue to buy U.S. Treasuries to help stabilize the American financial system as the global financial crisis deepens.

The latest data shows China continues to have a strong appetite for U.S. debt. In September it passed Japan to become the largest overseas holder of Treasuries. China’s holdings of the securities increased $67.5 billion in October to $652.9 billion, according to Treasury Department data.

That level of purchases is probably unsustainable because China’s reserves growth has slowed, said Setser. Data on China’s foreign-exchange reserves at the end of December are scheduled for release next week.

The reserves may have declined due to “changes in valuations of assets, especially in euro-denominated assets,” Chinese central bank adviser Fan Gang said Jan. 6.

Euro’s Decline

The euro has fallen 18 percent against the U.S. dollar from its record high of 1.6038, touched on July 15.

China’s reserves may decline in the first half of 2009 as a pause in the yuan’s appreciation prompts speculators to pull money out of the country, Moody’s Economy.com said on Dec. 30.

Other factors that may slow growth in the reserves this year include a possible narrowing of the trade surplus and less foreign direct investment.

China’s trade surplus may have dropped to $34 billion in December, from a record of $40.09 billion in the previous month, according to the median estimate in a Bloomberg survey of 17 economists.

China should diversify its currency holdings away from Treasury bills because credit default swaps show they are “a relatively big risk,” former central bank adviser Yu Yongding said Dec. 12.

Such diversification is not easily executed, said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai.

“We still have the same old problem,” he said. “There are not many other places to invest the money.”


162 comments:

  1. Any idea of how much of the Chinese currency reserves and T-Bill holdings are held by their government as opposed to Chinese corporations or individuals?

    How much is held by the Chinese Army and its' proxies, seperate from the political government?

    The article mentions that The total amount of U.S. government debt outstanding rose to $10.7 trillion in November, from $9.15 trillion a year earlier

    Obviously the author is not participating in the rufus school of economic tallies, which reported the US debt at $1 trillion, just yesterday.

    This wide varience in reportage must be explained, some how.

    Kevin Hamlin and Judy Chen are reporting the US Government debt to be in a range that is widely acknowledged as being accurate. rufus's figures seem to be wildly under the norm of most reporting.

    I wonder why?

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  2. Especially if China, alone, holds $652.9 billion, according to Treasury Department data

    To say nothing of the others around the globe that hold US debt.

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  3. That $1 trillon is the projected deficit this year. So, add another trillion to our debt this year and next...pretty soon the National Debt could be up to $15-$20 trillions and that doesn't include the unfunded $8 trillion for The Presription Drugs or the $37 trillion for Medicare and Social Security.

    It wouldn't surprise me if eventually the whole world simply declares "Game Over."

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  4. Here's an interesting paper from 2000, The end of monetary sovereignty wherein the authors speak of a de facto global currency, the US Dollar.

    Wow, how times have changed. Confidence in the financial institutions is shaken (severely). The whirled herd is spooked and no one knows where any of this is actually going. Fear is rampant.

    My advice is to "hang on tight and enjoy the ride."

    "Round and round she goes and where she stops, nobody knows."

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  5. Speaking of fear, I expect the President Elect in his inaugural speech to reprise Roosevelt's "The only the thing we have to fear is fear itself" speech. It is a fitting thing to do and if written and delivered properly, could eclipse Roosevelt's version in the annals of history. That might require that the economy get much worse than it currently is.

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  6. There is no plan B when it comes to a currency. That will only happen if the US tries to make itself smaller. The CEO of USA had an opportunity to turn Amicorp LLC around back in the latter part of 2007, but saw no financial weapons of mass destruction on Wall Street, main street or in any undisclosed location.

    Martha Stewart was thrown in jail while the robber barons pillaged the world financial system and the best the company CEO could do was to promote a failed California politician to head up the SEC.

    Five years with not one executive veto. Clearly the CEO must have been impressed with the genius of the US Congress. That same house with all the chronic offenders are in place and ready for further action. A new CEO will take over in ten days. I doubt one speech will make a dent.

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  7. I doubt one speech will make a dent.Agree.

    It will be for the history books. "First Black President resolutely lead his country away from the edge of the abyss." That is; if we manage to not go over the edge.

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  8. Patrick Swayze is in deep shit and has gone into hospital after catching pneumonia. Now that is a real problem.

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  9. I fear Steve Jobs may follow.

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  10. Harry Reid’s shamnesty stand: Senate Bill 9 will tear down the border “wall”


    Harry Reid has filed S. 9, the Democrats’ new shamnesty bill. Not much difference in principle between Reid’s bill and McCain-Kennedy-Bush. Disingenuous lip service to immigration enforcement? Check. Path to legalization? Check.

    There are a few new nuggets — most notably, open hostility to the Fence in Name Only on our southern border. Quoting from the bill:

    And I believe we would be wise to reconsider the effectiveness and cost of a wall along our southern border, which has adversely affected the fragile environment and vibrant cross-border culture of an entire region. Such a wall stands as a symbol of fear and intolerance. This is not what America is about and we can do better.

    “Vibrant cross-border culture?” Like the hellish, head-chopping, kidnapping and lawlessness striking fear on both sides of the border? “Fragile environment?” He’s more concerned about some desert plant than he is about the MS-13 gang members and drug runners traipsing across the “region.”

    That’s not all. Also prominently featured in Reid’s bill:

    We must also live up to the goal of family reunification in our immigration policy and join at least 19 other nations that provide immigration equality to same-sex partners of different nationalities.

    These are his top immigration concerns?
    God help us.

    Oh, by the way: McCain Hispanic outreach advisor and anti-”wall” activist Juan Hernandez approves!

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  11. Swayze is face to face with the fate which awaits us all. Everything else is temporal even foolish.

    Here David Limbaugh warns us of some foolishness to come.

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  12. Same Sex Illegals have long been one of my top concerns.
    I imagine the vast majority of US Citizens feel exactly the same way.

    Totally whirreled, Whit,
    Totally.

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  13. Perry clearly fears that the Sunni Arabs would react to a nuclear Iran by building nukes of their own. He said, “if North Korea and Iran cannot be contained, we face the real danger of a cascade of proliferation” of nuclear armed-states, he said. “Indeed, I believe that today we are clearly at the tipping point of nuclear proliferation. And if the world does tip, it will be irreversible and dangerous beyond the imagination of most people.”

    (Belmont Club)

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  14. not one word about how china has held the yuan down in value against the dollar...

    thus causing much of the trade imbalance...

    successive administrations have tried (and failed) to get china to loosen the control on the yuan's valuable

    only within the last 12 months has the yuan finally appreciated a tiny bit, as i recall about 18% thus RAISING the price of chinese made goods...

    many I have spoken to feel that the yuan needs to move another 18-30% to show it's real value, thus destroying the myth of "cheap" chinese goods...

    When real values are applied to the chinese miracle of producing cheap goods it turns out they aint that cheap....

    MANY countries can and do out produce China based on quality and value, just not "cheapness" & shortcuts...

    Now that the dollar had nosedived, caused oil to spike and now crash china is playing a difficult game...

    the yuan is still undervalued, quality and safeness of chinese goods is now upfront in the "marketplace", china needs 75,000 new jobs a WEEK to sustain it's population and without a growing USA market (that does consume 28% of world production) stagnation will occur...

    China needs to allow fair pricing of it's own goods WITHIN china, currently products cost more in china than Iowa.... This cannot continue...

    What will be interesting is that china needs to spend trillions and trillions (not billions) on roads, sewers, water, power & other basic infrastructure that we in the USA did 50 years ago and the question really is will china step up and spend it's accumulated wealth on boring investment like that for the basic stability of it's nation or will it invest it's money in growing it's military might to economically conquer areas of the globe for future commodity control.

    America is tightening it's belt, the recession is actually a great thing...

    Its the art of war folks... if a punch in our teeth causes a 2 by 4 across our enemies forehead it's worth it...

    In the span of 12 months, America has derailed OPEC, Russia and China collective goal in taking over the world....

    Yes we have a recession, so what?

    China has depression, Russia is imploding and Iran, Opec (including Hugo the Clown) are sucking air...

    It's war folks nd guess what?

    we are winning...

    G-d I love this nation...............

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  15. You are right there partner. We are all ultimate losers at the game of life.

    The answer is simple: Find your own meaning in life. Art, fine wine, good woman, use your mind, keep fit, be strong, let the bastards think they are winning. Any day that does not end in defeat is a victory.

    The big mysteries will be revealed or concealed at a time not of your choosing.

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  16. All should watch and study the revealed truth of the Prophet call Python...

    It was in the day of the late 70's that the Prophets arose..

    And thus they quoted "always look on the bright side of life"

    and thus the book was written and sealed...

    and we all now can share and study in the writings of the "Life of Brian"

    Written and Produced by the Prophets of the Python, Monty of course...

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  17. WiO said:
    It's war folks nd guess what?
    we are winning...


    WiO, you think some of this current "crisi" is intentional or manufactured? My wife does.

    Many years ago, I bought into (somewhat) the TriLateral Commission/Bilderberger/Council on Foreign Relations type conspiracy theories. Sure, I believe there are groups and powerful individuals with agendas but I don't know about the extent of their power to quickly effect the changes they seek. We know though that groups and individuals will always use the fog of war or crisis to further their own ends. Therein lies the danger.

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  18. From the Limbaugh link:
    True conservatives out there -- however many remain -- must not forget the ominous words of Obama's chief of staff, Rahm Emanuel, who said: "Rule one: Never allow a crisis to go to waste. They are opportunities to do big things."

    Perhaps this statement was not as sexy for sound bite purposes as Obama's cavalier remark to Joe the Plumber that we need to spread the wealth around a little bit. But it is even more revealing.

    Sure, much has been stated about Emanuel's comment, but not nearly enough. For in all the media-generated excitement over Obama's pecs and the faux conservative approval of Obama's "moderate" appointments, it appears we have failed to grasp the significance of this revelation.

    If we'd take a breath and view this soberly, we'd see that Emanuel's remark is evidence that liberals are now coming out of the closet. They'll no doubt still eschew the liberal label, but they'll unapologetically embrace liberal policies in a way they wouldn't have before.

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  19. WiO, you think some of this current "crisisi" is intentional or manufactured? My wife does.

    not sure if it was "planned" as much as i think it was more played out and happened...

    the arabs/opec/russia all got greedy about oil prices, at the same time as china was hoarding dollars because of the trade imbalance and their greed in keeping the yuan undervalued...

    at the same time the iranians (and others) in their hatred for us, starting to prop up the euros in a bid to screw the USA's dollars...

    couple that with Jimmy carters (and other administrations continuation of this) community re-investment act that forced banks (with the help of our current prez elect & acorn) to lower standards of lending, this allowed the chinese to USE the dollars they had no other place to put them..

    I dont think Bush PLANNEd what happened...

    I do think that the writing has been on the wall for several years about what was about to happen...

    but, as in skiing, when you see ice ahead you have 2 choices, panic and crash or ride thru the patch and get to the other side....

    I see opec/russia/arabs/hugo chavez all trying to push oil thru 200 a barrel.... this popped the ballon payment in the easy credit market...

    but i see the natural reaction to the oil price f*ckin we got as a tightening of spending which is part of our "recession"

    I have witnessed many people who are incompetent get over paid corporations and government jobs...

    some has stated that the "pop" in the easy credit, oil bleed, recession is like the waves pulling back from the beach exposing all the rocks and garbage hiding under the surface...

    the dow and other equities (housing boom) went UP at unrealistic rates for 10 years with nary a peep out of anyone saying it was crap...

    the markets have corrected, not crashed

    real values, p/e ratios, investment not speculation are now back in style...

    about time...


    stated:: Many years ago, I bought into (somewhat) the TriLateral Commission/Bilderberger/Council on Foreign Relations type conspiracy theories.


    dont buy into that but OPEC and the there are those that do hate america....

    but in the end America is not a land of smoke and mirrors, nor are we a one trick pony...

    our enemies are....

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  20. Rule one: Never allow a crisis to go to waste. They are opportunities to do big things."

    this is why obama scares the shit out of me...

    now msnbc is calling unemployment rates at 7.2% BUT IF YOU ADD IN THE PART TIME WORKERS WHO ARE ACTUALLY UNDER EMPLOYED AND WISH TO WORK FULL TIME THE UNEMPLOYMENT RATE IS 13.3%

    they are manufacturing a crisis to GIVE FULL TIME JOBS AND BENEFITS TO THE UNDESERVING POOR...

    Watch the movie My Fair Lady...

    There is a scene that describes this to a tee...

    the undeserving poor...

    yep bho is going to thank those undeserving poor with a 500 check for voting for him...

    simply buying votes of the lazy, parasites that look for handouts, free housing, free medical, free higher education and then easy decent paying jobs that they can relax and coast in....

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  21. In his latest observations on Gaza, Muslims and Jew hatred, Mark says it all.

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  22. Rat, you're confusing Debt with Deficit. I said our true Deficit for the year was less than a trillion.

    Having said that, you've got to take those Debt numbers with a grain of salt, also. I'd have to look back; but, I'm sure that 9 Billion number is conflating our "Debt" to the Social Security System with the Real Legal debt as evidenced by outstanding Notes, and bonds.

    Lotsa hyperbolatin going on. Always is.

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  23. I agree with your excellent observations WiO. That is why you are on the EB Board of Directors.

    What we are seeing in whirled events is a "disharmonic convergence."

    With one is spiritual, it may also be seen as a "wakeup" call from the All-Mighty.

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  24. "If one is spiritual..."

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  25. Would $200 thousand debt seem exorbitant for someone making $200 Thousand/annually? Of course not. What if they owned their own printing press? Well hell, game over, right?

    Then, why should $14 Trillion be large for the most powerful country on earth that controls the worldwide economy if that country has a $14 Trillion income?

    It's not, of course. In fact our "true" debt (social security is an unfunded liability - that can be changed by vote of 51% of congress - is a much lower percent of our national income than most OECD countries.

    We're a Democracy folks. We have to learn how to separate out the "politics" from the "economics." Right now it's in both political parties short-term interest to ballyhoo the "DEBT!"

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  26. Folks, when the S started getting really close to the F all the currency/bond traders all over the world stampeded toward the dollar, and treasuries. That should tell you all you need to know about the state of the world.

    Everything else is just blather.

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  27. Yeah, well Rufus there's the rub. Income goes up and down but debt is onerous. That's the lesson all the whirled is being reminded of right now.

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  28. You equate the Government with the Country, rufus, it is not one and the same.

    The Country has an income of $14 trillion, the Government income is running at about 18% of that.

    So the income to the government is around $2.52 trillion per year.

    So the $15 trillion worth 6 years of income, not 1.
    Each trillion represents six months income, not a month's worth.

    This coming year is already at a $1.2 trillion deficit and Big O will add another trillion to it.

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  29. Go HERE. The "True" Debt is about $6.4 Trillion. That's about 44% of our $14.4 Trillion GDP.

    That would be somewhat equivalent to an individual with 100% Job Security, and an take home income, annually, of $200,000.00 owing $88 thousand (car loan, mortgage, etc.)

    Doesn't sound nearly so exciting in those terms, does it?

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  30. Obama'a now going to create 3.5 million jobs, up from 3 million jobs a week ago. We got no worries. Like God, he can speak things into being.

    We're all just beginners here, folks.

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  31. We are the government, Rat.

    Again, when you borrow a trillion at a very low interest rate, and invest it at a higher interest rate (plus equity stake through warrants, and preferred bonds) THAT AIN'T RUNNING A "DEFICIT." That's "MAKING MONEY!"

    And, Congress ain't about to give the O a trillion bucks. Not a chance.

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  32. It's not nearly as onerous when you have the ability to "Print" the money, Whit.

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  33. "Obama is creating jobs all over America" is a royal metaphor.

    Always beware the royal metaphor.

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  34. The downturn is starting to hit here. The newly renamed Clearwater Paper (old Potlatch Forests) is cutting back to 3/4 week, and the local ammo company has laid off 70 people. Big deal for around here. Also Idaho's unemployment claims are really up over the state though I don't have the figures. And, tax money flowing into the state treasury is down too, forcing some program cutbacks. All this is good news for the universities.

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  35. I know, the government can print money or sell off assets such as the National Interstate Highway system but the fact is, short of defaulting, that debt is there to be paid off one way or another. Sometimes I think the plan is to pay it off with inflated dollars.

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  36. Tyler Cowen points to

    http://www.richmondfed.org/publications/research/region_focus/2008/fall/pdf/cover_story.pdf


    From the Richmond Fed:

    The Economic Consequences of Subsidizing Homeownership

    BY S T E P H E N S L I V I N S K I

    Ask most people in America today whether buying
    a home is better than renting one, and you’ll likely
    get a response that equates renting with stuffing
    money down a garbage disposal. The idea of homeownership
    today is not one that simply evokes the comfort or
    pride of living in a place of one’s own. Instead, it’s become
    part of a common investment philosophy.
    But if you ask Edmund Phelps, the Nobel Prize-winning
    economist from Columbia University, he’ll proudly declare
    that he doesn’t own a home. And to him, that’s not a bad
    thing. “It used to be that the business of America was
    business,” said Phelps in August 2008 to Bloomberg News.
    “Now the business of America is homeownership.” In fact,
    many economists will tell you that the American love affair
    with homeownership has some consequences that you won’t
    normally hear discussed.
    Yet, despite the warning of some experts, the federal
    government continues to play a role as matchmaker in
    this affair. Policymakers have been promoting homeownership
    as a goal for most Americans since the Great
    Depression. Even in the late 20th century, when the number
    of American homeowners was at historic highs already, the
    policy initiatives continued to expand. In 1995, when the
    homeownership rate as measured by the U.S. Census Bureau was about 65 percent, President Bill Clinton made it
    an explicit goal of his administration to boost it to 67.5
    percent by the year 2000. So he enlisted his secretary of
    housing and urban development, Henry Cisneros, to
    spearhead a “National Homeownership Strategy.” The
    policies that resulted encouraged a loosening of lending
    standards.
    The race to encourage homeownership is a bipartisan
    one. President George W. Bush, while not committing
    himself to a specific number, proposed raising the
    homeownership rate for minority families through a government-
    led “Homeownership Challenge.” The goal was to
    lower “barriers” to homeownership by using federal money
    to help low-income families make their downpayments and
    encourage “below-market-rate” investments.
    For most of the country’s history, however, the odds were
    that you did not own the home you lived in unless you were
    a farmer. Nor is it clear that owning a home is in the best
    interest of some who hold a mortgage today.
    The homeownership rate is about 68 percent now.
    Perhaps the best policy question is no longer why the homeownership
    rate in the United States is so low. A question that
    economists might ponder instead is: Why should we want
    the homeownership rate to be so high?

    [...]

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  37. Sometimes I think the plan is to pay it off with inflated dollars

    Same here.

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  38. Whoa! Look at This

    In the blink of an eye, the turn of a phrase, it's now 4 million jobs, up from the 3.5 million just quoted, 25% over last weeks 3 million.

    Fishes and loaves, jobs and money.

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  39. Once upon a time, Always Look on the Bright Side of Life

    http://www.youtube.com/watch?v=jHPOzQzk9Qo

    was played every morning on drivetime FM in DC. A knowing little anthem for the worker bees and those of us being dropped off at school by our mothers, to face another day of doom in algebra. "Out of the door, line on the left, one cross each."



    Just as apropos today:

    http://www.youtube.com/watch?v=gb_qHP7VaZE




    (And here I thought EB Directorships were handed out on the very basis of one's receptiveness to conspiracy, sort of splitting the difference with Wretchard between the highly suggestible and the just plain loony. My bad.)

    ReplyDelete
  40. gimme a five, five, five, gimme a five, five million, gimma a five million, gimme five, gimme five GONE for 5 million to the tall gentleman at the front of room....

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  41. A Director with a specialty in conspiracies holds a coveted position known as a Conspiratorship, Trish.

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  42. It's 78 degrees below zero in Alaska. You don't want to be reliant on Russia for your natural gas supply in that kind of weather.

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  43. [...]

    The Downsides of Widespread Homeownership
    Whether subsidies to homeowners encourage more home
    purchases or instead simply lead people to buy bigger
    houses may not matter much. What really matters is that
    both result in similar economic effects. As Poterba explains:
    “The general pattern has been that we have invested more in
    housing relative to other kinds of capital goods than we
    would in an economy in which the tax system and credit
    institutions did not tilt the playing field at all.” Simply put,
    Americans may have overinvested in housing.
    This has been a worry of economists for a while. It’s a
    concern based on what they see when they compare the
    rates of return — profit per dollar invested — for a variety of
    capital types. Most studies look at two broad categories:
    housing capital and nonhousing fixed capital. The latter
    consists of investments in manufacturing plants, machinery,
    and other sorts of investments that produce goods.
    Economic theory suggests that the rates of return for each
    form of capital should equalize over time. That’s because
    market forces would, all things being equal, allocate capital
    in such a way as to deplete the profit potential in this fixed
    set of investment options.
    For instance, if an investor in one sector saw a higher rate
    of return elsewhere he would move his money into that
    other sector. But if enough people followed suit, the profits
    in the newly popular sector would drop. (Imagine a suburban
    strip mall with eight ice cream stores. You can see how difficult
    it would be for each of them to make the profit that they
    would if they were the only ice cream store in town.) As the
    investment flows away from the old sector, however, the
    rates of return there will rise again. At some point — what
    economists call “equilibrium” — the rates of return for both
    categories of capital would be the same.
    But there is another element of housing that is unique:
    Buying a home is an investment made by people in a structure
    and in a community where they live. Perhaps there are
    other unmeasured benefits of housing investment above and
    beyond the simple rate of return. Some economists have
    suggested that housing investment creates a positive benefit
    (or “externality”) for the people who live in a community
    composed predominantly of homeowners. Renters, as the
    logic goes, don’t have much long-term interest in the
    property they inhabit. Homeowners, on the other hand,
    want the neighborhoods they live in to look good so you
    would expect them to pay more attention to how nice their
    property looks.
    Some economists, like Ed Glaeser, have found that the
    main positive externality of home investment is the number
    of well-tended gardens in communities with a larger number
    of owners. This benefit could be expected to increase the
    aesthetic value of the community and could increase the
    attractiveness of the community to potential residents.
    The most comprehensive studies — such as a 1998 paper
    published by the Federal Reserve Bank of Dallas — seek to
    include a measure of these sorts of externalities in their rate
    of return calculations. Yet, even then the conclusions suggest that Americans have overinvested in housing,
    relative to other nonhousing capital investment, since at
    least 1929.
    “When you observe that the measurable rates of return
    are different across the sectors,” said the Dallas Fed study
    author, Lori Taylor of Texas A&M University, “you either
    have to conclude that there are substantial unmeasured
    returns across the sectors or you have to conclude that society
    would be better off with a reallocation of resources.”
    These unmeasured benefits would have to be very large — at
    least $3,600 per homeowner in America — for the investment
    imbalance to be explained. And even if you assume
    that the positive externalities are this large, there may be
    vastly better ways for the government to encourage the good
    behavior.
    If the goal is for better-looking communities, why subsidize
    the purchase of the home? asks Glaeser. Instead, why
    not target the real cause of the community beautification?
    “You can target that,” he says, “with a limited gardening
    subsidy, for instance. Give people who plant a garden a subsidy
    to buy mulch and leave it at that.”
    Instead, the current policies produce an economy in
    which housing investment is generally higher than it would
    be if government didn’t favor it. And every dollar that is
    invested in housing stock is a dollar not invested in a more
    productive use elsewhere. That results in a net reduction in
    overall economic efficiency.
    Nor is it clear that using a home purchase as a primary
    vehicle for a family’s investment is sound financial advice.
    Robert Shiller, an economist at Yale University and an expert
    on national housing markets, has estimated that “from 1890
    through 1990, the return on residential real estate was just
    about zero after inflation.” Throw in the costs of maintenance
    of the property and it’s easy to see how renting could
    certainly be cheaper than owning, even if you include the tax
    advantages. Yet the opportunity cost of those home investments
    — the foregone investment opportunities elsewhere
    — go largely unseen.
    The costs of owning a home go beyond the financial commitments
    too. Being tied down to a house tends to make
    people less likely to leave an area in which employment
    prospects are deteriorating. After all, terminating a lease is
    much less costly and time-consuming than foreclosing on a house or selling a home, even if the owner breaks even on
    the transaction. Economists predict this would lead to a
    decline in “labor mobility,” the ability for people to move to
    where the jobs are.
    A seminal study by British economist Andrew Oswald of
    the University of Warwick traced the link between unemployment
    and homeownership. Oswald looked at the United
    States, the United Kingdom, France, Italy, and Sweden
    between 1960 and 1996 and discovered that, on average, a 10
    percentage point increase in homeownership tended to
    correlate with a 2 percentage point increase in the unemployment
    rate.
    Recent studies of European data discover that you don’t
    see these sorts of correlations in areas with higher concentrations
    of renters. Renters are simply more able and willing
    to move away when their community hits the economic
    skids. In addition, workers who aren’t likely to move from a
    specific location might create frictions in the markets for
    labor skills. It’s a cost to the economy when people live in an
    area in which their skills are no longer valued. But there is
    a potential personal cost too: The overall welfare of that
    worker may suffer.
    Homeownership also tends to contribute to adverse political
    incentives. Incumbent homeowners have an interest in
    keeping their property values high and have been shown
    statistically to have a bias in favor of land-use regulations.
    These restrictions limit the number of houses that can be
    built in any geographic area and, consequently, keep
    housing inventory low and property values artificially
    inflated.
    None of this means that economists think the United
    States should become a nation of renters. Nor is it likely that
    would happen anyway. Getting rid of the government
    subsidies to home purchases probably wouldn’t dent the
    homeownership rate much as long as people continue
    to prefer living in the suburbs (albeit it in slightly smaller
    homes) and the United States remains a wealthy
    country. Instead, the take-home message for policymakers,
    as Glaeser suggests, is that they should not aim
    to “increase homeownership at all costs.” Unfortunately,
    it may have taken major adversity in the financial
    and housing markets for this alternative storyline to be
    considered seriously. RF

    ReplyDelete
  44. So the income to the government is around $2.52 trillion per year.
    ==

    Not only that, but the US government hasn't has "disposable income" in decades. (What little there was during Clinton's time was pitiful compared to the expenses and debt).

    ReplyDelete
  45. Sometimes I think the plan is to pay it off with inflated dollars.

    We have a Winner!

    ReplyDelete
  46. Back on topic:

    China and the US have a symbiotic relationship. They need the capital and we want the low cost goods. That is, we did. We'll see how QVC, HSN and Walmart, et al, do as an indicator of current retail demand.

    Globalization didn't start with China. As I recall the first big supplier was Japan, then Korea, then manufacturing went to S.E. Asia and finally China began the heavyweight champ. Poor India was just beginning to emerge when everything went south.

    Obama's apparent turnaround on the stimulus plan is interesting in light of his campaign warning that the US was living beyond its means and could not continue consuming more than its share. Now, like Bush after 9-11, he will do whatever it takes to encourage the spending and growth. The whirled depended on US consumption and if the US consumer actually "reforms", the whirled will be the poorer for it. The US gets a cold; the whirled pneumonia.

    ReplyDelete
  47. You left out Taiwan, Whit. I remember, but can't recall when:), buying all sorts of stuff stamped "Made In Taiwan".

    ReplyDelete
  48. Trish, your paragraphing was driving me insane:

    The Downsides of Widespread Homeownership
    
Whether subsidies to homeowners encourage more home purchases or instead simply lead people to buy bigger houses may not matter much. What really matters is that both result in similar economic effects.

    As Poterba explains: “The general pattern has been that we have invested more inhousing relative to other kinds of capital goods than we would in an economy in which the tax system and credit institutions did not tilt the playing field at all.” Simply put,
Americans may have overinvested in housing. This has been a worry of economists for a while. It’s a concern based on what they see when they compare the rates of return — profit per dollar invested — for a variety of
capital types.

    Most studies look at two broad categories: housing capital and nonhousing fixed capital. The latter consists of investments in manufacturing plants, machinery, and other sorts of investments that produce goods.

    
Economic theory suggests that the rates of return for each form of capital should equalize over time. That’s because market forces would, all things being equal, allocate capital in such a way as to deplete the profit potential in this fixed set of investment options.

    
For instance, if an investor in one sector saw a higher rate of return elsewhere he would move his money into that other sector. But if enough people followed suit, the profits in the newly popular sector would drop. (Imagine a suburban
strip mall with eight ice cream stores.

    You can see how difficult it would be for each of them to make the profit that they would if they were the only ice cream store in town.) As the investment flows away from the old sector, however, the rates of return there will rise again. At some point — what
economists call “equilibrium” — the rates of return for both categories of capital would be the same.

    
But there is another element of housing that is unique: Buying a home is an investment made by people in a structure and in a community where they live. Perhaps there are other unmeasured benefits of housing investment above and
beyond the simple rate of return.

    Some economists have
suggested that housing investment creates a positive benefit (or “externality”) for the people who live in a community composed predominantly of homeowners. Renters, as the logic goes, don’t have much long-term interest in the property they inhabit.

    Homeowners, on the other hand, want the neighborhoods they live in to look good so you would expect them to pay more attention to how nice their property looks.


    Some economists, like Ed Glaeser, have found that the main positive externality of home investment is the number of well-tended gardens in communities with a larger number of owners. This benefit could be expected to increase the aesthetic value of the community and could increase the
attractiveness of the community to potential residents.

    The most comprehensive studies — such as a 1998 paper published by the Federal Reserve Bank of Dallas — seek to include a measure of these sorts of externalities in their rate of return calculations. Yet, even then the conclusions suggest that Americans have overinvested in housing, relative to other nonhousing capital investment, since at least 1929.

    
“When you observe that the measurable rates of return are different across the sectors,” said the Dallas Fed study author, Lori Taylor of Texas A&M University, “you either have to conclude that there are substantial unmeasured returns across the sectors or you have to conclude that society would be better off with a reallocation of resources.”


    These unmeasured benefits would have to be very large — at least $3,600 per homeowner in America — for the investment imbalance to be explained. And even if you assume that the positive externalities are this large, there may be vastly better ways for the government to encourage the good behavior.


    If the goal is for better-looking communities, why subsidize the purchase of the home? asks Glaeser. Instead, why not target the real cause of the community beautification?
“You can target that,” he says, “with a limited gardening subsidy, for instance. Give people who plant a garden a subsidy to buy mulch and leave it at that.”
Instead, the current policies produce an economy in
which housing investment is generally higher than it would be if government didn’t favor it. And every dollar that is invested in housing stock is a dollar not invested in a more productive use elsewhere. That results in a net reduction in overall economic efficiency. Nor is it clear that using a home purchase as a primary vehicle for a family’s investment is sound financial advice.

    Robert Shiller, an economist at Yale University and an expert on national housing markets, has estimated that “from 1890 through 1990, the return on residential real estate was just about zero after inflation.” Throw in the costs of maintenance of the property and it’s easy to see how renting could certainly be cheaper than owning, even if you include the tax advantages.

    Yet the opportunity cost of those home investments
— the foregone investment opportunities elsewhere
— go largely unseen.
    
The costs of owning a home go beyond the financial commitments too. Being tied down to a house tends to make people less likely to leave an area in which employment prospects are deteriorating.

    After all, terminating a lease is
much less costly and time-consuming than foreclosing on a house or selling a home, even if the owner breaks even on the transaction. Economists predict this would lead to adecline in “labor mobility,” the ability for people to move to where the jobs are.

    A seminal study by British economist Andrew Oswald of
the University of Warwick traced the link between unemployment and homeownership. Oswald looked at the United States, the United Kingdom, France, Italy, and Sweden between 1960 and 1996 and discovered that, on average, a 10 percentage point increase in homeownership tended to
correlate with a 2 percentage point increase in the unemployment rate.


    Recent studies of European data discover that you don’t see these sorts of correlations in areas with higher concentrations of renters. Renters are simply more able and willing to move away when their community hits the economic
skids. In addition, workers who aren’t likely to move from a specific location might create frictions in the markets for labor skills. It’s a cost to the economy when people live in an area in which their skills are no longer valued. But there is a potential personal cost too:

    The overall welfare of that worker may suffer.
Homeownership also tends to contribute to adverse political incentives. Incumbent homeowners have an interest in keeping their property values high and have been shown statistically to have a bias in favor of land-use regulations. These restrictions limit the number of houses that can be
built in any geographic area and, consequently, keep housing inventory low and property values artificially inflated.

    None of this means that economists think the United States should become a nation of renters. Nor is it likely that
would happen anyway. Getting rid of the government subsidies to home purchases probably wouldn’t dent the homeownership rate much as long as people continue to prefer living in the suburbs (albeit it in slightly smaller
homes) and the United States remains a wealthy country.

    Instead, the take-home message for policymakers, as Glaeser suggests, is that they should not aim to “increase homeownership at all costs.”

    Unfortunately, it may have taken major adversity in the financial and housing markets for this alternative storyline to be considered seriously. RF

    ReplyDelete
  49. Sometimes I think the plan is to pay it off with inflated dollars.

    We have a Winner!
    ==

    Hmm,..
    The US dollar is a reflection of the US economy. If the dollar loses its value and investors lose confidence in the dollar, they will also lose confidence in the US. If investors lose confidence in the US, all I can is good luck.

    ReplyDelete
  50. ..hasn't had "disposable income" in decades..

    ReplyDelete
  51. "Trish, your paragraphing was driving me insane"


    All a part of my plan, dear host.

    ReplyDelete
  52. "from 1890 through 1990, the return on residential real estate was just about zero after inflation.”

    That's the truth. Which is why the capital gains tax on real estate, a tax on the passing of time, is really just theft, a transfer of wealth.

    ReplyDelete
  53. If the dollar loses its value and investors lose confidence in the dollar, they will also lose confidence in the US.

    Haven't we been seeing the early stages of that already?

    ReplyDelete
  54. Haven't we been seeing the early stages of that already?
    ==

    Maybe. But what we've seen is miniscule to the potential damage the US could be facing. I think that if the US is not careful it could be facing negative immigration and with that a serious brain drain. And that is a very dangerous if not deadly prospect.

    ReplyDelete
  55. negative immigration

    I like the sounds of that. I wish about a million people would leave Idaho, we'd be back to the 250,000 when I grew up. Not that I don't like people, I generally do, but too much of a good thing puts too much pressure on nature's bounty.

    ReplyDelete
  56. pressure on nature's bounty.
    ==

    Bob, I think we'll made a treehugger out of you yet. :) What you've described is automotive urban sprawl.

    ReplyDelete
  57. I've always been a tree hugger, Mat, in my way. I've seen a lot of beautiful areas go sour. But here urban sprawl isn't really the problem, just too many folks able to access the more remote areas. If everyone would stay in the burbs all might be well. But folks have ATV's, campers, vacation homes, snowmobiles. At a certain point, it gets so it's not worth it going to some of the old places anymore. I can put up with urban sprawl, as long as I can get away from it. And, I'm part of the problem myself. It's just that I was here first:)

    ReplyDelete
  58. I can put up with urban sprawl, as long as I can get away from it.
    ==

    :)

    But that proposition is becoming more and more difficult. We really have to put the breaks on urban sprawl, and even reverse it.

    ReplyDelete
  59. Lord have Mercy. A mortgage is a HUGE tax deduction. I have a mortgage, and a renter helps me pay it through his higher taxes.

    In the real world you have to be a Maroon to rent.

    ReplyDelete
  60. If a brake should be applied to "urban sprawl" otherwise known as growth, let the market put its foot down. The population of this country has doubled in the past 25 years or so. That's a lot of growth in a short order of time. There was no need to grow up when this country had all the room to grow out.

    I like the idea of new urbanism as well as the next guy but I believe that it's expensive and exclusive. Look at Portland and Seattle for the result of liberal intentions. Pratical caps on the number of residents forcing many to commute 60 to 100 miles each way. I don't mind people voluntariy moving in new urban communities but I have grown to absolutely detest progressive government planning.

    ReplyDelete
  61. If a brake should be applied to "urban sprawl" otherwise known as growth,..
    ==

    That's a fallacy.

    This is not growth. This is a total waste of space.

    ReplyDelete
  62. Blogger rufus said...

    Go HERE. The "True" Debt is about $6.4 Trillion. That's about 44% of our $14.4 Trillion GDP.





    Rufus, are you saying GDP is equivalent to income???? You seem to be and that is just plain....ummm, wrong.

    ReplyDelete
  63. If you do not think that the Congress is going to spend an additional trillion, rufus, I'll betcha at least 10 Ameros.

    That they will, to the tune of at least $800 bn. Which when added to the $1.3 trillion already forecast, makes for TWO, trillion.

    ReplyDelete
  64. And that the Government can lay claim to ALL OF IT.


    Where I come from GDP is equivelent to sales, not profit.

    Profit equates to income, much more than sales do.

    Just sayin' that the 2.5 trillion is the government's historical share, they do not get credit for it all.

    Not even the Chinese do that, now.

    ReplyDelete
  65. rufus wants to take US to a new level, where we share the wealth, amongst US.

    Where all property is providence of the government, that is.

    ReplyDelete
  66. That looks like Phoenix with a density of 2,900 per sq/mi.

    That's no waste of space, that's room to breath.

    A third as dense as Gaza.
    Who'd want to live caged like that?

    No, I'll take the 3,000 per sq/mi and be ahead of the Palistinians.

    Israel is 8,522 sq mi, with a population of 7,282,000, a density of 839/sq mi

    Maricopa County which is 9,203 sq mi of which Phoenix is a part has a total of 3,072,149 residents a density of 396/sq mi.

    Israel, which has a density closer to Maricopa County's and Phoenix's than it does to Gaza.

    Rather than pack the immigrants and old residents of Israel tighter, they choose to expand Levittown type housing projects into the Arab territories.

    So that type of sprawl must be the smart housing solution.

    ReplyDelete
  67. Just got a book from the library, Mat, "Smog" a history of the Los Angeles valley. Thumbing through, I see a photo of an old smog suit! Don't know if it's real or for a curio. They were getting there as early as the 1930's, its actually better now, smog wise. In those early days there was unburned gasoline floating around in the air, making people sick.

    ReplyDelete
  68. Hard to argue with that photo you posted.

    ReplyDelete
  69. A lot of it is what you are used to. Spokane used to look huge to me, and in the scheme of things it isn't much.

    ReplyDelete
  70. Spurious calculations.

    Israel does everything it can to preserve and create additional green space and farm land. Sadly, Israel too suffers quite substantially from the plague of the American car culture. Hopefully, this is changing.

    ReplyDelete
  71. The corn farmers of Iowa.

    Iowa, Illinois, Nebraska and Minnesota account for over 50 percent of the corn grown in the U.S. Other major corn growing states include Indiana, Wisconsin, Michigan, South Dakota, Kansas, Missouri, Kentucky, and Ohio. These 12 states make up the Corn Belt.

    Now, amigo, look at the election results for those States

    Iowa - O
    Illinois - O
    Nebraska - Mav
    Minnesota - O
    Indiana - O
    Four of the top five went Democrat, just as rufus predicted. Their payoff is will continue and expand. While there are better ag products to grow, than corn, to produce ethanol.

    ReplyDelete
  72. If we accept the number for Federal Revenue as 2.15 trillion which the below link suggest was the take for 2005

    http://taxprof.typepad.com/taxprof_blog/2005/12/growth_in_feder.html

    and you have a deficit of 1 trillion in a given year that is equivalent to having an income of 100k and borrowing 50k. Now doing that as an individual in a given year is ok as long as you stop there but doing it year after year and letting it pile up, well, you'll go bust real fast.

    Now governments aren't like people and having the worlds exchange currency also plays a hefty factor but at some point it's not going to work out well. For historical precedence the British experience at the wane of the empire might be considered similar.

    If a country like Argentina ran deficits like the US AND had similar current account deficits, well, it couldn't. They (I think it was Argentina) experienced a run on their currency with deficits and current account deficits well below the ratios the US has been running for years now. Increasing those ratios does not bode well for the future. Good thing Obama peddles hope cause that's what we all need. We hope the sucker keeps on tickin' and a massive flight from the US dollar does not occur. Personally I've kept most of my stash out of the US for a number of years now and it's served me well but the US economy has been a major driver for the whole world and Canada in particular and it hurts when the party comes to an end.



    Rat, you mentioned GDP as being like total sales and I'm not even sure that is apt. GDP is the sum total of all economic activity. So, when, say Katrina levels NO, all the rebuilding costs ADD to GDP, there is no corresponding subtraction for the assets destroyed. On a single company basis GDP is more like the sum total of all Sales and all Bills paid, including salaries, by a given company.

    ReplyDelete
  73. Slovakia To Restart Nuclear Plant--Blames Russia

    Good for them. Shouldn't have turned it off in the first place. Who wants to rely on a contract with the Russians? Or at least the Russia of Putin the Poisoner?

    ReplyDelete
  74. Good thing Obama peddles hope cause that's what we all need. We hope the sucker keeps on tickin' and a massive flight from the US dollar does not occur. Personally I've kept most of my stash out of the US for a number of years now

    Ash sounds to becoming more conservative by the day.

    Where's the money for the national health program going to come from, in all this?


    By the way, the nuclear powered aircraft carrier George H. W. Bush was launched today.

    ReplyDelete
  75. Deuce - great post.

    Also excellent points made by DR and WIO. Rufus is out to lunch, smoking weed, or in total denial (replete with usual rationalizations). I suspect the latter.

    For an excellent book on this subject, see "The World is Curved - Hidden Dangers to the Global Economy" by David Smick (he's definitely a fiscal conservative, in addition to a consultant to central banks worldwide).

    From the language Ash uses in some of his recent posts (liquidity sloshing around the global system seeking the highest returns), it would appear he's either read it, or heavily influenced by someone who did.

    As I have read elsewhere, this downturn is more similar structurally to the 1870 depression than the one of the 1930's. The so-called Great Depression resulted from excess production and the ensuing equity crashes, and would only have been a recession were it not for major economic policy errors (tight money, high tariffs, excessive govt spending, etc.). The Depression of the 1870's, however, was CREDIT induced - excess credit for real estate in Europe,for Civil War, Reconstruction (such that it was - the Yankees were no. nearly as generous with the South as we all were with Europe and Japan) and railroad expansions in the US. Several Wall Street investment banks failed, triggering the failure of many commercial banks, and the subsequent unavailability of credit for Main Street. Some argue that this Depression actually lasted into the 1890's, especially in Europe, where it is referred to as the "Long Depression"! As you would guess, during that time, the US supplied cheap labor and commodities to "the world", taking trade away from the Europeans. Substitute China for the US and lump the US in with Europe and what does it sound like?

    Here is an excellent synopsis of the "Long Depression". The following paragraphs from it may suggest what's in store for "us" if history repeats itself:

    As the panic deepened, ordinary Americans suffered terribly. A cigar maker named Samuel Gompers who was young in 1873 later recalled that with the panic, "economic organization crumbled with some primeval upheaval." Between 1873 and 1877, as many smaller factories and workshops shuttered their doors, tens of thousands of workers — many former Civil War soldiers — became transients. The terms "tramp" and "bum," both indirect references to former soldiers, became commonplace American terms. Relief rolls exploded in major cities, with 25-percent unemployment (100,000 workers) in New York City alone. Unemployed workers demonstrated in Boston, Chicago, and New York in the winter of 1873-74 demanding public work. In New York's Tompkins Square in 1874, police entered the crowd with clubs and beat up thousands of men and women. The most violent strikes in American history followed the panic, including by the secret labor group known as the Molly Maguires in Pennsylvania's coal fields in 1875, when masked workmen exchanged gunfire with the "Coal and Iron Police," a private force commissioned by the state. A nationwide railroad strike followed in 1877, in which mobs destroyed railway hubs in Pittsburgh, Chicago, and Cumberland, Md.

    In Central and Eastern Europe, times were even harder. Many political analysts blamed the crisis on a combination of foreign banks and Jews. Nationalistic political leaders (or agents of the Russian czar) embraced a new, sophisticated brand of anti-Semitism that proved appealing to thousands who had lost their livelihoods in the panic. Anti-Jewish pogroms followed in the 1880s, particularly in Russia and Ukraine. Heartland communities large and small had found a scapegoat: aliens in their own midst.

    ReplyDelete
  76. I wonder how far these economic situations can be compared to each other. A hundred and thirty or forty years ago most of society was rural, which surely must act as something of a shock absorber. Today less than 5 percent live off the land, and that's mechanized. I'd think that things might more easily slip into disaster territory nowdays, due to lack of a rural shock absorber. But, I really don't know what I'm talking about. There must be advantages in today's situation that don't come to my mind.

    ReplyDelete
  77. "I wonder how far these economic situations can be compared to each other."

    I was just wondering the same thing.

    ReplyDelete
  78. It must be...any given day of the week:

    Chavez Threatens to Expel U.S. Embassy Personnel in Caracas
    Email | Print | A A A

    By Matthew Walter

    Jan. 10 (Bloomberg) -- Venezuelan President Hugo Chavez said he’s investigating whether representatives from the U.S. Embassy in Caracas met with leaders of the political opposition, and said he may expel them from the country.

    Chavez said he knows a group of opposition leaders recently flew to Puerto Rico to meet with “U.S. advisers” to discuss strategies to defeat the president’s proposal to eliminate his term limits in a referendum this year. Chavez said U.S. Embassy representatives may have been present.

    “If I can confirm this, I’ll throw them out of the country,” Chavez said at ceremony in Caracas commemorating the launch of Venezuela’s first satellite.

    [...]

    ReplyDelete
  79. (Sorry, whit, that was clearly not on topic.)

    ReplyDelete
  80. Nouriel Roubini | Jan 10, 2009

    I was recently interviewed by Maria Bartiromo for her Business Week column:

    January 7, 2009, Business Week

    Columbia's Amar Bhidé and NYU's Nouriel Roubini "When you have an integrated global economy…there are not many places to hide because markets [and economies] become correlated"

    By Maria Bartiromo

    A year from now we may look back on this column and thank heaven that not all of its grim predictions came true. But don't bet your kid's lunch money against Nouriel Roubini. A professor of economics at New York University's Stern School of Business and chairman of the consultancy RGE Monitor, Roubini in 2006 predicted the housing bust and an ensuing recession, among other on-the-money calls. And he says the worst is still ahead. Amar Bhidé, a professor of business at Columbia University, is a former McKinsey executive, a staff member for the commission that investigated the stock market crash of 1987, and author of the new book The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World. He, too, expects a trying year ahead. But beyond the black cloud hanging over America, he sees a country chastened and an economy strengthened by the ordeal.

    MARIA BARTIROMO Where are we right now in this economic slowdown?

    NOURIEL ROUBINI We are looking at the most severe U.S. recession in the last 50 or 60 years, both in terms of length and depth. Every piece of economic news that's come out in the last few weeks and months has been much worse than expected, from employment, holiday sales, capital spending by the corporate sector, the continued collapse of residential real estate, and a weakening even of the trade balance, so the rest of the world is also contracting.

    You say we are looking at a deep and possibly multiyear recession in America; an additional 15% drop in U.S. home prices; painful recessions in Europe, Canada, Japan, and other established economies; a sharp slowdown in China, India, Russia, and Brazil; and possibly default by some emerging-market countries. Can anything stop this locomotive bearing down on us? The only positive news I see is that the policy response, both in the U.S. and in other countries, is going to be quite aggressive. But in my view, that policy stimulus is going to have most of its effects in 2010. And the cost of issuing a huge amount of public debt will be trillion-dollar budget deficits this year and next, which eventually is going to have a crowding-out effect on private demand. So either we issue a huge amount of public debt to finance it, and that's going to push up interest rates, or we print a lot of money that eventually is going to be inflationary and again damaging to the economy. We have no choice but to have an aggressive policy response, but it's not a free lunch.

    In a new article in Foreign Policy, you suggest that corporate earnings will shock any equity analysts still deluding themselves. Where will the Dow be at midyear? I see it about 20% below current levels. Same for the S&P.

    How many jobs do you think will be lost in 2009? I expect job losses of at least 2.5 million.

    How much confidence do you have in the new economic team that President-elect Obama has named? I think folks like Tim Geithner, Larry Summers, and others are as good as you can get. But the problems they're facing are so vast that even the best economic team and the best economic policies are not going to start having an effect until the end of 2009 [or beginning of] 2010.

    Do you think criticism of how Hank Paulson and his team have handled the crisis is fair? It was a very tough situation, of course, but I think that the policy response by Paulson has been relatively confused, not credible, and inconsistent. So I give them a low grade in terms of performance.

    As an investor, what do I do in this scenario? Safe assets such as government bonds are the place to be until midyear when we see whether the fog of uncertainty clears in the direction of a recovery.

    And keep as much of my assets as possible in cash for the near term. Absolutely.

    Are there any areas escaping this upset? Are there any places to hide? Unfortunately, when you have an integrated global economy with trade and financial links, there are not really many places to hide because markets become correlated, and economies become highly correlated.

    Do you see any positives coming out of this crisis? The U.S. has been living in a situation of excesses for too long. Consumers were out spending more than their income and the country was spending more than its income, running up large current-account deficits. Now we have to tighten our belts and save more. The trouble is that higher savings in the medium term are positive, but in the short run a consumer cutback on consumption makes the economic contraction more severe. That's the paradox of thrift. But we need to save more as a country, and we have to channel more resources to parts of the economy that are more productive. And when you have too many financial engineers and not as many computer engineers, you have a problem.

    What do you advise students coming out of school? I think this country needs more people who are going to be entrepreneurs, more people in manufacturing, more people going into sectors that are going to lead to long-run economic growth. When the best minds of the country are all going to Wall Street, there is a distortion in the allocation of human capital to some activities that become excessive and eventually inefficient.

    ReplyDelete
  81. "2009 will be catastrophic"

    http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vh4CZyP0iSKg.asf

    ReplyDelete
  82. I especially like the part about "rising geopolitical tensions."

    ReplyDelete
  83. Blogger trish said...

    "I wonder how far these economic situations can be compared to each other."

    I was just wondering the same thing.

    ---


    Standard gripe about historical comparisons. Everything is different yet it's all the same...those ignorant of history are doomed to repeat it...

    I quite like j willie's reference to 1870. I don't know much about that. I, like much of the west, is mired in the 1930 crash as the beginning of economic history. I quite like Niall Ferguson's debunking of that notion.

    ReplyDelete
  84. Blogger trish said...

    I especially like the part about "rising geopolitical tensions."



    You really are of the warrior class aren't you?

    ReplyDelete
  85. Are we in a pissy mood, ash? Because if we are, I have just the thing for it...

    ReplyDelete
  86. http://www.youtube.com/watch?v=z9opdQcowXs&feature=PlayList&p=D1945363E8862A0D&playnext=1&index=5

    ReplyDelete
  87. San Francisco is creating 12,000 some jobs, money from the Feds. It's estimated to cost $172,000 some per job.

    Might as well pay those people $50,000/year to stay home, and $122,000 per folk would be saved.

    Among other records that are going to be set in the next four years will be the record for wasted money.

    ---
    I is mired in the 1930's crash too, thinking govmint spending didn't really solve it then, and probably won't now.

    ReplyDelete
  88. Ah, Willie m'boy; this ain't the 1870's. Hell, it's not even the 1970's.

    What's wrong with "having lunch, and smoking a little weed?" (I'd Never deny it.)

    The LIBOR is dropping, nicely. Credit is loosening up. No Trade Wars. Biofuels are cutting into OPEC. Inventories are okay. Incomes are holding up (increasing.)

    TPTB got us into this mess; but their response this year was Brilliant.

    When the O'man takes the oath the clouds will part, and the Media will suddenly see the dazzling light of recovery; and trumpet same far, and wide.

    Roubini's had his fifteen minutes. We'll be clawing our way out by the second quarter. It's, basically, over, guys. Time to worry about something else.

    ReplyDelete
  89. Look, here's how we do it. We lower taxes, and let the talented ones make some money, and create some value.

    Then, we raise taxes and take it away from them. They bitch, and go back to work. But they spend too much time figuring out how to avoid all the taxes. Cuts down on their productivity.

    We elect another Republican administration. They lower taxes. The talented ones do it again. We elect a Dem, and take it away from them again.

    That's how it works. That's the only way it can work. What's for lunch? Who brought the Bud Light?

    ReplyDelete
  90. That's a pretty good analysis, Rufus. It does seem to work that way. This time around though one wonders if it will be possible to ever vote them back out. We may have a permanent or semi permanent majority now that will keep voting the big spenders in.

    -----

    Here's A Flying Car that looks to actually be produced, but I can't figure out why anyone would really want one if you can't land and take off on roads in the USA. Might come in handy in Africa, or maybe in Australia on those big sheep ranches though. Might have a future in a crimal gang's inventory too.

    ReplyDelete
  91. I want one.

    The Dems will manage to find a way to piss the people off, eventually, Bob, just like the Pubs always do. There'll be another "Iranian Hostage Crisis," or somesuch.

    Or, maybe they'll hang on till we just get tired of looking at the same ole crooks, day after day. But, you can bet, we'll "change" parties again - some day.

    ReplyDelete
  92. Hugh Hewitt links to a rather silly headline that claims Israel has destroyed whole battalions of Hamas, but the entire amount is 300. How can you have a battalion of 300 or less?
    _______________

    IDF: Whole Hamas battalions wiped out
    Is Hamas falling apart? Senior IDF officer says roughly 300 Hamas men killed since army launched ground incursion, whole Hamas battalions wiped out in dozens of clashes with troops over weekend; terror group also hit by wave of desertions, official says

    ReplyDelete
  93. Good question. Must not be showing up for work. Taking the day off.

    There's a news item from the NYT on how Bush turned down an Israeli request to let them bomb Iran, overflying Iraq. If it's accurate. Says Bush has instituted some covert operation or other.

    Unlikely to work. Isaiah posted a link a while back showing the US has turned over the air space above, I can't remember, 10,000 feet or something, back over to the Iraqis. His point being, if Israel wants to attack Iran now they can just fly high getting there, through Iraqi air space.

    I recall we sold Israel 5,000 bunker busting bombs a year or more ago.

    ReplyDelete
  94. Who Owns Leon Panetta?


    Yeah, it would be nice to know who gave the big bucks to his 'foundation'.

    ReplyDelete
  95. That would be me, al-Bob:
    I love Garlic.
    Garlic, Oregano, Beer, and I'm fine.

    ReplyDelete
  96. Oh, the Humanity!
    The Horror!
    The Outrage!
    ---

    Prince Harry video nasty that will spark outrage

    By Robert Jobson and Ryan Sabey, 10/01/2009

    ROYAL rebel Prince Harry today stands accused of racism in a bombshell home video as he swaggers in front of his army comrades.

    The soldier prince pours shame on the Royal Family as he calls an Asian squaddie “our little Paki friend” and tells another officer cadet jokingly wearing a camouflage veil off duty: “F*** me, you look like a raghead”—an offensive term for an Arab.

    ReplyDelete
  97. Oh, my God!
    He said

    "Raghead!"

    We're Doomed!

    ReplyDelete
  98. Plus Jalepeno, Red Pepper, Tobasco, Asiago, Maozzarella, & Parmesan.
    Helluva Chicken Sandwich Midnight Snack, if I do say so, myself.

    ReplyDelete
  99. Would be kinda cool to have that flat plate of Temperate Earth covered with organic farms and naked Hippy Chicks, though.

    ReplyDelete
  100. "Kevin Hamlin and Judy Chen are reporting the US Government debt to be in a range that is widely acknowledged as being accurate. rufus's figures seem to be wildly under the norm of most reporting.

    I wonder why?
    "
    ---
    The Fucking Dupe is in Total Fucking Denial, what else?
    ...should be given a BC Lifetime Achievement Award.
    GWB is Great!
    GWB is Good!
    Hail GWB!
    PUTZ!

    ReplyDelete
  101. ...he just got through giving the head of the Border Patrol a Presidential Award with a 60k bonus.
    ...after 500 Supervisors signed a petetion to the effect that the jerk was tearing the organization apart.

    ReplyDelete
  102. Washington Times - Border chief wins bonus despite criticism
    Jan 8, 2009 ... The presidential merit award, equal to 35 percent of Chief Aguilar's $172000 annual pay, is 1.7 times larger ....
    ...another GWB Dick-Sucking Crony Traitor.

    ReplyDelete
  103. Every MF LOSER Gets a Presidential Award!

    ...Helluva Run, Rufus!
    ...Helluva Run, MORON!

    ReplyDelete
  104. Tenant,
    Franks,
    Minetta,
    Aguilar,
    ...the list goes on, but the mind reels.

    ReplyDelete
  105. The letter, a copy which was obtained by The Washington Times, challenged Chief Aguilar's job performance since his May 2004 appointment, saying there had "never been a time when our chief has been so out of touch with the field, or a time when our chief has become a politician and lost sight of his most important responsibility: to be an advocate for the agency and its mission."

    "You clearly see yourself as an agent of change for political bosses rather than a person who has been entrusted to ensure that the Border Patrol remains a top-notch law enforcement agency, ready and able to carry out its critical function,"
    the letter said.

    ReplyDelete
  106. Never has been a President in my lifetime so happy to give OUR money away.
    Elitist, Spiteful, Small-Minded JERK.

    ReplyDelete
  107. "Yes we have a recession, so what?"
    ---
    It's the first recession ever in the post-global warming era, where EVERYTHING IS A COSMIC DISASTER,
    worthy of emptying the pocketbooks of the citizenry and it's grandchildren.

    ReplyDelete
  108. F/ing Mother Nature? Look at all the open green space, Doug. Even right by the freeway! Look at that freeway interchange for instance. A guy could picnic right inside those little green circles there, and feel like he's right back at home on the range.







    I've been taking oil of oregano. Wife bought some, says it's a cure all your ails ills aches deal. So far none of aches have gone away.

    ReplyDelete
  109. Bob,

    Los Angeles is one of the ugliest most alienating cities I've been to. It ranks up there with Buffalo and Detroit. That's not by coincidence.

    ReplyDelete
  110. As we draw the curtain on Smogtown, let us pause for a moment of respiratory delirium. Southern Californians today can breathe easier than at any time since the beastly murk engulfed the West Coast's glamour city that fateful day in 1943. Ozone levels are 1/3 what they were in the chaotic 1950's. Where parts of the region once smashed federal health guidelines more than 2/3's of the year, the "bad" days now represent just about 1/4 of the calendar. Where a low-lying ceiling of unburned exhaust regularly chafed the bodies and psyches of millions of suburbanites along the planet's first "smog belt", the guazy blue sky there today is not a mirage. Sure, Los Angeles remains stuck wearing the crown of America's metropolitan air-pollution capital. Just like yesteryear, the skyline and hills occasionally vanish behind that familiar russet patina. Yet, Smogtown's sixty-five years of revolutionary gadgetry, civic feistiness, hard-won regulation, and population survival constitute an enormous success, no matter its overshadowing by global warming and other scourges of modern civilization.

    from "Smogtown"

    Book says the new cars are over 90%cleaner emitting than the old models. However there is some super small particulate that escapes the emission mechanisms that the boys in the lab have discovered and are studying, that has health effects.

    Overall, much progress has been made.

    But the sprawl continues, out into the desert, heading Vegas way.

    ReplyDelete
  111. Lacker: Fed Cash Flood Poses Inflation Risk

    Friday, January 9, 2009 1:46 PM


    The Federal Reserve's dramatic dumping of money into the economy poses inflation risks down the road, and the central bank may need to raise interest rates before credit markets have completely recovered, Richmond Fed President Jeffrey Lacker said on Friday.


    "While at the present time, credit programs do not conflict with our monetary policy strategy, there could well be a time at which monetary stimulus needs to be withdrawn to prevent a resurgence in inflation, even though credit markets are not deemed fully healed," he told the Maryland Bankers Association.


    Lacker, one of the toughest anti-inflation hawks among senior Fed officials, cautioned that the central bank is mixing monetary policy with credit policy as it offers loans to stabilize financial markets in deep disarray after the housing crash and the surge in mortgage defaults. The expansion of the Fed's balance sheet may be risky, he said.


    "Credit policy is also aimed at promoting growth, but it is more a form of fiscal policy in that it uses the public sector's balance sheet to alter the allocation of resources," Lacker said.


    "Many historical instances of monetary instability have been the result of central banks being prevailed upon to use their balance sheets for fiscal ends in ways that impeded their ability to keep inflation under control," he said.

    ReplyDelete
  112. Marital discord is not restricted to 4x4 drivers. It has even happened to people in VW Polos

    Weird:
    I looked out the window yesterday and saw the back half of one of these (or similar) and wondered what I was looking at.
    ...someday I'll go out the front door...
    Or maybe only the back.

    ReplyDelete
  113. An adequate way to drive to hell

    was in Dublin last weekend, and had a very real sense I’d been invited to the last days of the Roman empire. As far as I could work out, everyone had a Rolls-Royce Phantom and a coat made from something that’s now extinct. And then there were the women. Wow. Not that long ago every girl on the Emerald Isle had a face the colour of straw and orange hair. Now it’s the other way around.

    Everyone appeared to be drunk on naked hedonism. I’ve never seen so much jus being drizzled onto so many improbable things, none of which was potted herring. It was like Barcelona but with beer. And as I careered from bar to bar all I could think was: “Jesus. Can’t they see what’s coming?”

    ReplyDelete
  114. If he believed what he writes, he'd be Rufus's English Cousin.

    ...Luckily, he just does it for laughs, and to make a living:

    " believe the government knows this is a distinct possibility and that it might happen next year, and there is absolutely nothing it can do to stop Cameron getting both barrels from my Beretta. But instead of telling us straight, it calls the crisis the “credit crunch” to make it sound like a breakfast cereal and asks Alistair Darling to smile and big up Gordon when he’s being interviewed.

    I can’t say I blame it, really. If an enormous meteorite was heading our way and the authorities knew it couldn’t be stopped or diverted, why bother telling anyone? Best to let us soldier on in the dark until it all goes dark for real.

    On a more cheery note, Vauxhall has stopped making the Vectra, that dreary, designed-in-a-coffee-break Eurobox that no one wanted. In its place stands the new Insignia, which has been voted European car of the year for 2009.

    This award is made by motoring journalists across Europe, and, with the best will in the world, the Swedes do not want the same thing from a car as the Greeks. That’s why they almost always get it wrong. Past winners have been the Talbot Horizon and the Renault 9.
    "

    ReplyDelete
  115. "the Swedes do not want the same thing from a car as the Greeks. "
    ---
    No shit, Senior.
    (We are the Seniors, of course.)

    ReplyDelete
  116. "Look at all the open green space, Doug. Even right by the freeway! Look at that freeway interchange for instance. A guy could picnic right inside those little green circles there, and feel like he's right back at home on the range."
    ---
    That's where they usually find the dead bodies.
    ...in multiples.

    ReplyDelete
  117. Bob,

    Guess who else refuses to pedal his ebike uphill?

    http://www.ecogeek.org/content/view/2457/

    (Hint: Same guy responsible for the Converj)

    ReplyDelete
  118. Nice lookin' bike.

    You got to remember your cell phone, and have a friend with a 'big pickup' near, for when the juice fails, when you go riding.:(


    We went birding. We've been invaded by These

    I don't recall cormorants in the area before, but there are a lot around. Kind of sleek looking when they fly. Fish and Game, and the
    City too, are making plans to kill a bunch of them. Got to protect the migrating fish.

    ReplyDelete
  119. Lots of cormorants in Perth. Not so much in Adelaide. A few.

    ReplyDelete
  120. As capitalism staggers through its first globalized economic crisis, the costs won't be measured only in dollars and cents.
    From newly rich Russia to eternally impoverished sub- Saharan Africa, social strains are threatening the established political order, putting some countries' very survival at risk.

    ...

    The US housing slump that began in 2007 has cascaded into a worldwide crisis that forced central bankers to cut interest rates to near zero to unlock credit markets, pushed governments to bail out their biggest banks amid a $US1 trillion of writedowns, and sent titans like General Motors Corp. and American International Group Inc. begging for bailouts.

    ...

    On Nov. 25, Pakistan clinched a $US7.6 billion International Monetary Fund bailout to avert a debt default amid ebbing growth and an inflation rate of 25% in November that is ruining the livelihoods of its poor.


    Captitalism Takes a Battering

    ReplyDelete
  121. Fight global warming! Kill your flat screen TV!

    They are in Britain, so it must make sense.

    ReplyDelete
  122. General manager of the Shangri-La's Fiji Resort, David Hopcroft, says Fijians are resilient but Australia should offer help.

    "I saw a few of my staff line up on the side of the road waiting to come to work and they were soaking wet," he said

    "I thought, 'Okay, from the rain. [But] one girl swam 25 minutes across the river to come to work.


    Flooded Fiji

    ReplyDelete
  123. You got to remember your cell phone, and have a friend with a 'big pickup' near, for when the juice fails, when you go riding.:(
    ==

    Or, you got to remember your electric power cord in the trunk. :P

    ReplyDelete
  124. Another place I always wanted to go, Fiji.

    ReplyDelete
  125. It is a nice looking bike. I'm going to show it to my wife.

    ReplyDelete
  126. Would look nice in the back of a big 4X4.

    ReplyDelete
  127. This comment has been removed by the author.

    ReplyDelete
  128. Keep it up and I think you would be looking at the front of a big 2x4. :D

    ReplyDelete
  129. I'm just kidding, Bob. Although you know, every joke has a grain of truth in it. :)

    Actually, it doesn't matter what you prefer to drive. As long as options are becoming available for others to chose more efficient electric vehicles, I'm happy.

    ReplyDelete
  130. Every Yoke has a Gram of Chloresteral.

    ReplyDelete
  131. Billboard for el-cheapo Tiger Air here says:

    'Cheap enough to say, 'Phuket, I'll go'.

    ReplyDelete
  132. Australian stocks fell 1.5 percent on Monday as miners BHP Billiton Ltd and Rio Tinto Ltd were hit hard on concerns about a deep global recession on the back of rising unemployment in the United States. Australia's benchmark S&P/ASX 200 index lost 57.5 points to 3,678.2 points by 2330 GMT, after edging up 0.6 percent last week.

    BHP shares lost 1.9 percent to A$31.08, while Rio slipped 4.6 percent to A$41.89.


    Economy Worries

    ReplyDelete
  133. With the aim of building a "new era" in the bilateral partnership and making it more global, the two leaders are expected to agree to establish a joint project by the end of this month to study a range of political and economic problems facing the international community, Japanese government sources said.

    Shuttle diplomacy between Japan and South Korea had been suspended since 2005 when relations became strained by then Japanese Prime Minister Junichiro Koizumi's repeated visits to Yasukuni Shrine in Tokyo, where the war dead including Class-A war criminals are enshrined. South Korea and other Asian countries view the shrine as a symbol of Japan's wartime aggression.

    But Japan-South Korea relations improved during the administration of Koizumi's successor Shinzo Abe, and Abe's successor Yasuo Fukuda, whose diplomacy was often described as dovish. Lee agreed Feb. 25 to resume the reciprocal visits and build a "new era" when Fukuda visited Seoul to attend Lee's inauguration ceremony.


    Economic Issues

    ReplyDelete
  134. I know you were just givin' me a broadside, Mat.

    ReplyDelete
  135. My tentative guess is that Bernanke's blitz will "work" – perhaps later this year. Markets will start to look beyond deflation.

    They will remember that the Fed is boosting its balance sheet from $800bn to $3,000bn, and that it sits on an overhang of bonds that must be sold again.

    "The euthanasia of the rentier" will wear off, to borrow from Keynes. That is when the next crisis begins.


    Bond Bubble Burst

    ReplyDelete
  136. Broadside
    From Wikipedia, the free encyclopedia

    older naval warfare

    Broadsides were quite different during older naval warfare, in the age of sail. An 18th century man of war like the HMS Victory had cannons that were only accurate at short range. The penetrating power of naval guns was mediocre; which meant that the thick hull of a well-built wooden ship could only be pierced at short ranges. These wooden ships sailed closer and closer towards each other until cannon fire would be effective. Each tried to be the first to fire a broadside, often giving one side a decisive headstart in the battle when it crippled the other ship.[1]

    ReplyDelete
  137. Been on the Constitution. Pretty cool.

    ReplyDelete
  138. Meanwhile, David Cameron stepped up calls for a General Election, insisting that a change of government could restore confidence to the recession-hit economy.

    The Tory leader said a new administration would promote recovery because it could "wipe the slate clean" and acknowledge the mistakes of the past.

    He vowed his party would be ready whenever Gordon Brown decided to call an election.


    Shaking Recession

    ReplyDelete
  139. The controversial Ukrainian declaration, seen by AFP late Sunday, also maintains that Ukraine no longer owes money to Russia's Gazprom and denies stealing gas intended for European customers.

    Putin said earlier that the gas conflict with Ukraine had already cost Russian gas giant Gazprom 800 million dollars (600 million euros) in lost revenue.

    "Europe has to give out a clear and comprehensible signal... to Ukraine so that (Kiev) behaves in a normal and civilised way," Russian news agencies cited Putin as saying in an interview with German television.


    Deal Collapses

    ReplyDelete
  140. BigGovHealth

    Those old ships are really beautiful, but they must have darn hard to handle. And, they look, with all those sails towering up so high, kind of flimsy in a way. All those sails would put a hell of a load on those cross bars, I'd think. Must have taken real skill to design and build one of those, placing the wood right, making it fit, making the sails, a real art.

    Beautiful.

    ReplyDelete
  141. On the 2 trillion yen cash handout program, 63 percent of respondents were against it in the Asahi poll and as were 78 percent in the Yomiuri poll. Those respondents say the program is unlikely to be effective as an economic stimulus step, the papers reported.

    On preference for the leader of the nation, 39 percent named Ichiro Ozawa, chief of the main opposition Democratic Party of Japan, against 27 percent for Aso, the Yomiuri said.

    It is widely believed that a Cabinet will find it difficult to remain in power when the public support rate falls below the 30 percent mark.


    Payout Plan

    ReplyDelete
  142. What kind of Aircraft does Tiger fly, Sam?

    ReplyDelete
  143. This year is 'a bad time to buy a home,' analyst warns - MarketWatch

    According to the latest data available, home prices are back to their March 2004 levels nationally. Prices in 20 major U.S. cities fell 18% for the year ended October, according to the Case-Shiller price index published by Standard & Poor's. See story on home price data.
    National home prices were down 23% from their July 2006 peak through October, and Stevenson at Fox-Pitt predicted an incremental 20% drop in prices before bottoming, a peak-to-trough decline of roughly 40%.

    "While a drop of 40% seems absurdly high ... it would only put home prices back to where they were at the beginning of 2002," Stevenson said.

    The analyst released his bearish note on the same day the ADP employment index showed U.S. private-sector firms shed a larger-than-expected 693,000 jobs in December. See Economic Report.

    According to the latest data available, home prices are back to their March 2004 levels nationally. Prices in 20 major U.S. cities fell 18% for the year ended October, according to the Case-Shiller price index published by Standard & Poor's. See story on home price data.

    For the year, Phoenix chalked up the biggest drop -- 32.7%.

    Here's how prices in the other 20 cities performed in the 12 months through October:
    Las Vegas, down 31.7%; San Francisco, down 31%; Miami, down 29%; Los Angeles, down 27.9%; San Diego, down 26.7%; Detroit, down 20.4%; Tampa, down 19.8%, Washington, down 18.7%; Minneapolis, down 16.3%; Chicago, down 10.8%; Atlanta, down 10.5%; Seattle, down 10.2%; Portland, down 10.1%; New York, down 7.5%; Cleveland, down 6.2%; Boston, down 6%; Denver, down 5.2%; Charlotte, down 4.4%; and Dallas, down 3%.

    Elsewhere Tuesday, the Conference Board reported that consumer confidence hit a record low in December, as worries increased about current business and labor-market conditions.
    See full story.

    ReplyDelete
  144. Asian stocks fell, led by commodity producers and industrial companies, as the worsening global recession drives down demand for raw materials.

    ...

    President-elect Barack Obama said in an ABC interview on the weekend that reviving the U.S. economy will require scaling back on his campaign promises and personal sacrifice from all Americans.

    ...

    Cosco Corp. Singapore Ltd. slipped 5.1 percent to 83.5 Singapore cents after India’s Great Eastern Shipping Co. scrapped orders for two bulk carriers due to “the current uncertain business environment.” This is the second order cancellation for Cosco in a month.


    Commodity Producers

    ReplyDelete
  145. Disaster office spokesman Pajiliai Dobui said power supplies were cut, drinking water was restricted and telephone lines were down in some places.

    While the airport was open, many international flight departures were heavily delayed and tourists were still having difficulty reaching the terminal, he said.

    "The road is open but that's not a good sign really. It's only because the tide is low so we're trying to get people through," Mr Dobui said.


    Stranded in Fiji

    ReplyDelete
  146. The U.S. Embassy in Tokyo also set up a booth at the airport where consular officials and staff offered assistance to passengers.

    "It was easy (to get the authorization), and I accept it for the sake of security against terrorism," a 45-year-old woman from Kawasaki in Kanagawa Prefecture who was flying to Oakland told reporters.

    A 29-year-old man from Yokohama who was on his way to Virginia said, "I felt a bit confused since it is a new system. I had asked a travel agency person to obtain the authorization."


    Authorization System Starts

    ReplyDelete
  147. Time to buy in Vegas.

    True. It's been the shits down there.

    ReplyDelete