MaxedOutMama
Wednesday, April 30, 2008
Good Morning!
I have been following ADP employment for a while. In particular, this report has employment up 10,000 in April (nonfarm private), but revised the March gain down to 3,000. Not very good at all. But this is the most interesting part of the report:
Advance GDP is reported at 0.6%, higher than most estimates. PCE grew at 1%, but spending on durable and nondurable goods dropped (Table 1). Services accounted for all of the growth in PCE. Moving to Table 3 (now we are in billions of $), the total gain for Q1 was 17.4. Gross Private Domestic Investment was down again by 21.1. Fixed investment was down 45.6, and the build in nonfarm inventories added 20.1. That will be a subtraction from Q2.
Much of the positive GDP is actually coming from the inflation adjustments on imports/exports. GDP is just one measure of growth in the economy. It may not be the best. On a current dollar basis, the trade deficit increased 28.4. After the magic of inflation adjustments, that gets converted to a 7.3 gain. If you really believe that this indicates growth in the economy, you live in a different economic universe than I do.
Final sales of domestic product dropped 6.1.
Bottom line on this, before revisions, is that it is a poor report. Without the inventory build GDP would be negative. Without the magic of realifying away our growing current dollar import/export balance, GDP would be negative. Investment in nonresidential structures was negative.
Moving along to Table 8, which measures changes in percent from the year-ago quarter, we see that there is improvement in the rate of decline of gross private domestic investment. The trajectory is as follows:
Large businesses, defined as those with 500 or more workers, saw employment decline 18,000, while medium-size companies with between 50 and 499 workers declined by 14,000. Conversely, employment among small-size businesses, defined as those with fewer than 50 workers, advanced 42,000 during the month.The relatively strong April CIT receipts bear this out - and that was not what I was expecting. The sample size on this report is pretty good - it is about 20% of full-time workers or roughly 15% of all workers.
Advance GDP is reported at 0.6%, higher than most estimates. PCE grew at 1%, but spending on durable and nondurable goods dropped (Table 1). Services accounted for all of the growth in PCE. Moving to Table 3 (now we are in billions of $), the total gain for Q1 was 17.4. Gross Private Domestic Investment was down again by 21.1. Fixed investment was down 45.6, and the build in nonfarm inventories added 20.1. That will be a subtraction from Q2.
Much of the positive GDP is actually coming from the inflation adjustments on imports/exports. GDP is just one measure of growth in the economy. It may not be the best. On a current dollar basis, the trade deficit increased 28.4. After the magic of inflation adjustments, that gets converted to a 7.3 gain. If you really believe that this indicates growth in the economy, you live in a different economic universe than I do.
Final sales of domestic product dropped 6.1.
Bottom line on this, before revisions, is that it is a poor report. Without the inventory build GDP would be negative. Without the magic of realifying away our growing current dollar import/export balance, GDP would be negative. Investment in nonresidential structures was negative.
Moving along to Table 8, which measures changes in percent from the year-ago quarter, we see that there is improvement in the rate of decline of gross private domestic investment. The trajectory is as follows:
06 Q4: -3.6%We will have passed trough in the overall business cycle when that sucker turns positive again.
07 Q1: -6.6%
07 Q2: -5.7%
07 Q3: -3.5%
07 Q4: -3.7%
08 Q1: -2.8%
Tuesday, April 29, 2008
US And ROW Conference Board Measures
I am not a huge fan of Conference Board measures, but I do look at their Consumer Confidence Index:
Of course food and energy prices are the main factor producing these slides, and the current situation part of the survey is what has been producing the last few months of declines. Last year some consumer surveys tended to show that consumers were relatively comfortable with their own situations, but worried about the economy in general. Some economists and columnists were arguing that the pattern showed that consumers were just worried about news chatter, and that there really wasn't anything wrong with the economy. I did not feel that this was a valid claim because the shift to discount stores and pricing pressures at grocery stores were already clearly evident at the beginning of 2007. A change in that type of consumer behavior is not produced by media.
Regardless of the truth of that assertion, such a claim can no longer be made with a straight face:
One of the reasons I don't rely much on the various Conference Board measures is that they mix derivatives like stock prices with other measures, and another is that what they consider a leading index I consider a coincident index. But since I am always trying to gaze into the crystal ball of the future (bank lending policies have to adjust for what is coming down the road - not what is happening), I have a much greater need than most for true leading data.
Nonetheless, I thought it would be interesting today to look at the US "leading" index compared to a few of ROW biggies.
The US:
What is interesting to me about this is that any country which was bubbling is still showing relatively better performance by Conference Board measures, and that the degree of the bubble seems somewhat correlated with relative strength. The logical conclusion is that the true global effect of the credit cycle is not only not complete but barely beginning. In other words, there is still a lot of left-over credit impetus in these economies, and the implication would be that there is still a strong downward impetus on ROW for at least another year.
There is also no support whatever for a decoupling thesis. I always found that theory bizarre; one of the functions of credit cycles is to synchronize normally unrelated business cycles. On the way up that works wonderfully; on the way down it is quite uniquely painful. We are on the way down with much further to go.
Of course food and energy prices are the main factor producing these slides, and the current situation part of the survey is what has been producing the last few months of declines. Last year some consumer surveys tended to show that consumers were relatively comfortable with their own situations, but worried about the economy in general. Some economists and columnists were arguing that the pattern showed that consumers were just worried about news chatter, and that there really wasn't anything wrong with the economy. I did not feel that this was a valid claim because the shift to discount stores and pricing pressures at grocery stores were already clearly evident at the beginning of 2007. A change in that type of consumer behavior is not produced by media.
Regardless of the truth of that assertion, such a claim can no longer be made with a straight face:
The percentage of respondents intending to take a vacation over the next six months has fallen to a 30-year low, another sign of consumers turning more cost conscious.I think consumer confidence readings are produced by a combination of the end of the housing piggy bank and the cost increases consumers are experiencing.
One of the reasons I don't rely much on the various Conference Board measures is that they mix derivatives like stock prices with other measures, and another is that what they consider a leading index I consider a coincident index. But since I am always trying to gaze into the crystal ball of the future (bank lending policies have to adjust for what is coming down the road - not what is happening), I have a much greater need than most for true leading data.
Nonetheless, I thought it would be interesting today to look at the US "leading" index compared to a few of ROW biggies.
The US:
The Conference Board announced today that U.S. leading index increased 0.1 percent, the coincident index increased 0.1 percent, and the lagging index increased 0.3 percent in March.Germany:
* The leading index increased slightly in March, following five consecutive monthly declines. Money supply (real M2)*, index of supplier deliveries (vendor performance) and the interest rate spread made large positive contributions to the index this month, offsetting the large negative contributions from initial claims for unemployment insurance (inverted), building permits and stock prices. During the six-month period ending in March, the leading index declined 1.6 percent (a -3.3 percent annual rate), and the weaknesses among its components have been very widespread.
The Conference Board announced today that the leading index for Germany declined 0.9 percent and the coincident index increased 0.1 percent in February.France:
* In February, the leading index fell sharply again as stock prices, new orders in investment goods and consumer confidence all made large negative contributions to the index. In the six months since August 2007, the leading index has declined by 2.6 percent (about a -5.1 percent annual rate), down substantially from the first half of 2007 when its six-month growth rate reached about 4.5 to 5.0 percent (annual rate). The leading index has been down or flat in five of the last six months, and the weaknesses among the leading indicators have become more widespread than the strengths in recent months.
The Conference Board reports today that the leading index for France declined 0.3 percent and the coincident index increased 0.2 percent in February.Japan:
* The leading index declined for the fifth consecutive month in February. New unemployment claims (inverted) and the stock price index made large negative contributions to the index this month. Index levels were revised slightly downward between September and January as fourth quarter data became available for the ratio deflator of value added to unit labor costs and as a result of revisions to unemployment claims. The six-month change in the leading index fell to -1.8 percent (about a -3.5 percent annual rate) during the six-month span through February, well below the six-month change of 1.6 percent (about a 3.1 percent annual rate) during the six-month span from February 2007 to August 2007. In addition, the weaknesses among the leading indicators have become very widespread.
The Conference Board reports today that the leading index for Japan decreased 0.2 percent and the coincident index decreased 0.1 percent in February.It's extremely tempting to me to correlate Germany and Japan because they are, relatively speaking, economies that depend on manufacturing. Regardless, the annualized six month trend goes as follows:
* The leading index declined slightly in February, and has declined in ten of the last twelve months. Stock prices, the six-month growth rate of labor productivity, and the Tankan Business Conditions survey continued to make large negative contributions to the index in February. With this month's decrease, the leading index has fallen by 2.9 percent between August 2007 to February 2008 (a -5.7 percent annual rate), well below its 0.7 percent decline during the first half of 2007 (about a -1. 4 percent annual rate), and the weaknesses among the leading indicators continued to be more widespread than the strengths.
US: -3.3%The ROW countries are through February whereas the US is through March. If you go to the Conference board page you can see other countries. The reason I picked these countries is that France, Germany and Japan really were not greatly dependent on the housing bubble, in contrast to the UK and Spain. The UK and Spanish annualized six month changes are -2.5% and 2.0% respectively.
France: -3.5%
Germany: -5.1%
Japan: -5.5%
What is interesting to me about this is that any country which was bubbling is still showing relatively better performance by Conference Board measures, and that the degree of the bubble seems somewhat correlated with relative strength. The logical conclusion is that the true global effect of the credit cycle is not only not complete but barely beginning. In other words, there is still a lot of left-over credit impetus in these economies, and the implication would be that there is still a strong downward impetus on ROW for at least another year.
There is also no support whatever for a decoupling thesis. I always found that theory bizarre; one of the functions of credit cycles is to synchronize normally unrelated business cycles. On the way up that works wonderfully; on the way down it is quite uniquely painful. We are on the way down with much further to go.
Monday, April 28, 2008
The Week Of Reckoning
It's the last week of the first month of the quarter, so that means blizzard of economic news. On Wednesday we get advance GDP Q1 and Chicago PMI. Then on Thursday and Friday we get initial claims, the monthly employment report, auto sales, NACM, ISM, and nondurables in factory orders. It will be interesting.
I am mired in work right now, so I will not be able to get back to the issue of law and European ethnic cleansing for a bit, or not to the degree necessary. If I can't get back to it this week, I will get back to it next weekend.
Energyecon wanted discussion of the ATA truck tonnage index in March:
Obviously this shows a break. However March was something of an oddity; an auto related strike sharply reduced some shipments. The pattern preceding March had been that commodity shipments were up while intermodal shipments were down. See rail for March:
Interestingly, intermodal shipments are beginning to revive a bit.
I believe that strength in production shipments is not really slumping aside from autos and construction. What is amazing is that overall volume has been pushing up as autos and construction slump.
Trucking costs are escalating sharply with the rise of diesel, so one would expect some traffic to be diverted to rail wherever possible. However trucking accounts for the bulk of freight and rail cannot pick up too much of it.
I am mired in work right now, so I will not be able to get back to the issue of law and European ethnic cleansing for a bit, or not to the degree necessary. If I can't get back to it this week, I will get back to it next weekend.
Energyecon wanted discussion of the ATA truck tonnage index in March:
Obviously this shows a break. However March was something of an oddity; an auto related strike sharply reduced some shipments. The pattern preceding March had been that commodity shipments were up while intermodal shipments were down. See rail for March:
Railroads originated 1,308,482 carloads of freight in March 2008, down 0.1 percent (1,467 carloads) from March 2007, the AAR said. U.S. intermodal rail traffic, which consists of trailers and containers on flat cars and is not included in carload figures, totaled 856,404 units in March 2008, down 5.7 percent (51,705 trailers and containers) compared to March 2007.The rail pattern so far in April is showing some sustained weakness but a return to overall volume increases on strong carloads:
Total volume was estimated at 34.9 billion ton-miles, up 3.3 percent from the 16th week of 2007.Other factors which combined to make March a bit odd were probably the timing of orders for Easter and spring break since Easter was so early this year. We are beginning to see more overall weakness in construction-related shipments. Last year was weak, but sustained somewhat by stronger commercial and industrial construction. This year that impetus is fading.
...
Cumulative volume for the first 16 weeks of 2008 totaled 5,169,692 carloads, up 1.0 percent from 2007; 3,487,182 trailers or containers, down 3.5 percent; and total volume of an estimated 534.9 billion ton-miles, up 2.3 percent from last year.
Interestingly, intermodal shipments are beginning to revive a bit.
I believe that strength in production shipments is not really slumping aside from autos and construction. What is amazing is that overall volume has been pushing up as autos and construction slump.
Trucking costs are escalating sharply with the rise of diesel, so one would expect some traffic to be diverted to rail wherever possible. However trucking accounts for the bulk of freight and rail cannot pick up too much of it.
Saturday, April 26, 2008
A Rather Remarkable Blogging Event
Shrinkwrapped notes discussions of genocide and/or mass expulsion to deal with Muslims in Europe. Check out the comments.
SW is discussing a post at Gates of Vienna that began with this statement of the European dilemma:
I have sympathy for the individuals who find themselves living in or amid the extremist Muslim areas of Europe. They are facing a real problem, and the government doesn't want to address it or even admit that this problem exists. See, for example, the controversy in the UK over one bishop's remarks:
Simply enforcing the laws that exist will be enough to sort out the wild-eyed Muslim radicals from the rest of the population. When women are being raped in Sweden and free-speech rights are being violated in the UK, the solution is clear - enforce the laws of European civilization. Doing that will be enough to defend the civilization. Is simply enforcing laws that demand respecting other people's rights so unthinkable?
Obviously some of the commenters on SW's post don't have any confidence that their government will do that, but most ignore his point entirely, and some introduce even stranger tangents:
Europe's problem is that the progressive culture there has made defending yourself and your property more of a crime than it is to steal, rape or beat up a person on the street. So naturally the most thuggish groups among the population prevail, which is why the most violent extremists among the Islamic population are prevailing.
This is what the failure to enforce laws brings. Thuggishness and a belief in the viability of mass murder.
SW is discussing a post at Gates of Vienna that began with this statement of the European dilemma:
...Islam constituted an existential threat to the survival of European civilization, and that Islam’s influence on Europe therefore needed to be eliminated. It further concluded that, logically speaking, the various ways of achieving this goal could be broadly subdivided into three categories:It's quite amazing that people don't see that considering genocide a solution to the problem is more of an existential threat to European civilization. SW is strongly attacked in the comments for pointing out that this is quite irrational, but of course it is.
1) inducing Muslims to leave of their own free will, 2) mass deportations, and 3) genocide.
I have sympathy for the individuals who find themselves living in or amid the extremist Muslim areas of Europe. They are facing a real problem, and the government doesn't want to address it or even admit that this problem exists. See, for example, the controversy in the UK over one bishop's remarks:
MUSLIMS were accused of being "in denial" by the senior Christian bishop accused of inflaming anti-Islamic feeling by declaring extremists have made parts of Britain "no go areas" for non-Muslims.The bishop responded to his critics and elicited some agreement:
Bishop of Rochester, Dr Michael Nazir Ali, defended himself against a barrage of criticism at an inter-faith meeting at Ilford Islamic Centre on Friday.
"Christian clergy have been prevented from distributing literature in people's homes, Christian workers have been attacked or intimidated.So the bishop made some headway. The idea that all Muslims support the type of thing that the bishop is discussing is as wrong as the idea that all American blacks agree with Rev. Wright's comments.
"I think the Muslim community and wider community both, need to attend to this situation and address it, rather than being in denial."
Centre spokesman Mohammed Azam said an "unfortunate understanding of Islam" had sprouted because some mosques were teaching Arabic "by rote" and without a true understanding of the Koran. He added: "There is extremism and we'd be foolish not to recognise that."
Simply enforcing the laws that exist will be enough to sort out the wild-eyed Muslim radicals from the rest of the population. When women are being raped in Sweden and free-speech rights are being violated in the UK, the solution is clear - enforce the laws of European civilization. Doing that will be enough to defend the civilization. Is simply enforcing laws that demand respecting other people's rights so unthinkable?
Obviously some of the commenters on SW's post don't have any confidence that their government will do that, but most ignore his point entirely, and some introduce even stranger tangents:
You forget the basic problem Europe faces : it has no natural resources. It cannot sustain itself. And the rest of the world is getting richer all the time, which means it's getting harder for europeans to justify their keep. In fact, unless things change fast, any reasonable prediction of energy production has to acknowledge that Europe's ability to sustain itself will fail within years. Everyone in Europe can see it is starting to sputter, and today we see the mere tip of the iceberg.Overpopulation is not Europe's problem. If Europe is worried about energy, Europe has the ability to build nuclear power plants, etc.
Therefore genocide is upon Europe, for there are too many people for the infrastructure, and we're not building infrastructure. In fact we're actually *destroying* badly needed infrastructure (thank you al gore). And if there's one lesson to be learned from history : it will not happen quietly. Never has, never will. If people don't do it, nature, yes reality itself, will do it, or at the very least make our lives a living hell. And people have never let nature take it's course in the history of Europe.
Besides : as you say, you can't stop this evolution. It has clearly affected both the green fringe and the extreme left fringe, it will not stop there. And neither can I stop it. So what's there to do except prepare (AND obviously, to hope for a miracle, but acknowledge that a miracle is necessary) ?
Europe's problem is that the progressive culture there has made defending yourself and your property more of a crime than it is to steal, rape or beat up a person on the street. So naturally the most thuggish groups among the population prevail, which is why the most violent extremists among the Islamic population are prevailing.
This is what the failure to enforce laws brings. Thuggishness and a belief in the viability of mass murder.
Thursday, April 24, 2008
Night Of The Undead US Economy
Needless to say, New Home Sales are now tanking in a gloriously expectable manner. The reason is that there is enough foreclosure inventory on the market in some of these areas at very low prices to undercut new home sales. It's most unpleasant to be sitting trying to sell new units when a block over there are four REOs for sale, and the prices on those REOs are getting cut 5% a month.
The only region still generating a lot of sales is the south. Out of the 526,000 units sold in March, the south accounted for 312,000 of them. Therefore - this is important - the median and average prices on these reports are not at all comparable to prior years' pricing, and should be completely disregarded.
Not that prices are rising! Reported supply is now dropping, even if we take into account all of those hidden, recycled units that are never reported. Over the year on an SA basis, homes for sale at the end of the period dropped from 548,000 to 468,000. However this is still not good enough to reduce months of supply, which rose over the year from 8.3 to 11 months. Ouch. Further builder bankruptcies to follow.
What about the hidden, recyled inventory for all those cancellations that Census does not track? Well, one of the measures I am using to guesstimate when that supply starts to fall are Completed homes for sale at the end of the period. Over the year that number rose from 181,000 to 189,000. Permits, starts and completions are beginning to fall, though, so sometime this year inventory actually should start decreasing. I feel pretty sure that we have not reached that point yet. Another inductive metric I am using to guesstimate the turn in real supply is the median months for sale figure. Over the year that rose from 5.5 to 7.5 months, and it has risen in each of the recent months.
So why is this a tale of the Undead US economy rather than the Dead US Economy? Well, the housing market in general is in a deep recession, financials are in deep doodoo, and autos are in a recession. But there's more to the US economy than that.
Initial Unemployment Claims: On an NSA basis they dropped about 40,000, and on an SA basis they dropped about 33,000. Better yet, both NSA and SA continuing claims are falling. The unemployment picture is worse than last year's, but it is improving slightly.
So what can account for the better UI trend? Well, manufacturing really is doing better than last year.
Advance Durable goods came in decent - not great - but decent. This indicates significant strength in some sectors, because cars are horrendous. Ex-transportation, the shipment/inventory ratio YTD is 3.5/2.5, and new orders are up 3.0. Not bad at all! The weaker dollar does appear to be producing some insourcing. Primary metals shipment/inventory ratio YTD is 7.4/1.0! Fabricated metals look different at 0.6./1.7, but on the month the ratio is 0.8/0.1. YTD Capital good shipment/inventory ratio is 6.4/10.8. The monthly on that is 1.7/1.7. Not bad, and much better than last year's YTD 0.5/7.9 and monthly of 0.5/0.6.
Almost anything to do with the consumer side of the economy is weak or depressed, but production has a much bigger relative pass-through to economy overall. So we are in the odd position of having rail and trucking volumes rising this year even as the overall economy is weakening.
Because the Fed has achieved what they had to do, I expect that the Fed is about done with cutting. Eventually the weakness in the rest of the world is going to roll back and make further production gains in the US difficult, and then the Fed will cut again. However, taking the hit in building and autos now will slowly build up some latent impetus for later.
The rest of the world will not escape, and when it really begins to slacken we need to have some of our tragedies behind us.
The only region still generating a lot of sales is the south. Out of the 526,000 units sold in March, the south accounted for 312,000 of them. Therefore - this is important - the median and average prices on these reports are not at all comparable to prior years' pricing, and should be completely disregarded.
Not that prices are rising! Reported supply is now dropping, even if we take into account all of those hidden, recycled units that are never reported. Over the year on an SA basis, homes for sale at the end of the period dropped from 548,000 to 468,000. However this is still not good enough to reduce months of supply, which rose over the year from 8.3 to 11 months. Ouch. Further builder bankruptcies to follow.
What about the hidden, recyled inventory for all those cancellations that Census does not track? Well, one of the measures I am using to guesstimate when that supply starts to fall are Completed homes for sale at the end of the period. Over the year that number rose from 181,000 to 189,000. Permits, starts and completions are beginning to fall, though, so sometime this year inventory actually should start decreasing. I feel pretty sure that we have not reached that point yet. Another inductive metric I am using to guesstimate the turn in real supply is the median months for sale figure. Over the year that rose from 5.5 to 7.5 months, and it has risen in each of the recent months.
So why is this a tale of the Undead US economy rather than the Dead US Economy? Well, the housing market in general is in a deep recession, financials are in deep doodoo, and autos are in a recession. But there's more to the US economy than that.
Initial Unemployment Claims: On an NSA basis they dropped about 40,000, and on an SA basis they dropped about 33,000. Better yet, both NSA and SA continuing claims are falling. The unemployment picture is worse than last year's, but it is improving slightly.
So what can account for the better UI trend? Well, manufacturing really is doing better than last year.
Advance Durable goods came in decent - not great - but decent. This indicates significant strength in some sectors, because cars are horrendous. Ex-transportation, the shipment/inventory ratio YTD is 3.5/2.5, and new orders are up 3.0. Not bad at all! The weaker dollar does appear to be producing some insourcing. Primary metals shipment/inventory ratio YTD is 7.4/1.0! Fabricated metals look different at 0.6./1.7, but on the month the ratio is 0.8/0.1. YTD Capital good shipment/inventory ratio is 6.4/10.8. The monthly on that is 1.7/1.7. Not bad, and much better than last year's YTD 0.5/7.9 and monthly of 0.5/0.6.
Almost anything to do with the consumer side of the economy is weak or depressed, but production has a much bigger relative pass-through to economy overall. So we are in the odd position of having rail and trucking volumes rising this year even as the overall economy is weakening.
Because the Fed has achieved what they had to do, I expect that the Fed is about done with cutting. Eventually the weakness in the rest of the world is going to roll back and make further production gains in the US difficult, and then the Fed will cut again. However, taking the hit in building and autos now will slowly build up some latent impetus for later.
The rest of the world will not escape, and when it really begins to slacken we need to have some of our tragedies behind us.
Wednesday, April 23, 2008
Atlas, Um, Shrugged
40 ringgit (Malaysian currency) is about $14 USD. Apparently thieves in Sabah, Malaysia, worked for several days to remove beams from a power pylon in order to get approximately that on the black market. As a consequence of this commercial endeavor, the pylon collapsed and took out the power supply for a good part of the state.
There are many ways to look at this, but the most interesting to me is that multiple people worked for days and took considerable risks for such a low return. It may well be that they got more than double the official estimate, but that would still generate an astonishingly low daily return.
The cost to the utility was estimated at more than $300,000 USD.
This is inflation in action, and it's why these governments have to maintain subsidies. Raiding a rice warehouse is one thing, but when people start dismantling pylons carrying live wires out of desperation, you have no option. Of course, given that world population is increasing in these countries and that they must subsidize, this really means that the subsidized commodities become price insensitive for a time.
In other recent news, Canada cut 50 basis points, the London commercial RE market looks to be breaking, the Spanish builders are beginning to hold their own fire sales, and the phenomenon of immigrants buying apartments is beginning to crumble.
As for worldwide inflation, it doesn't seem clear to me that it is being affected all that much by monetary policy. Australia, which is likely to raise rates again from its current 7.25%, is currently seeing inflation almost exactly equivalent to the US. When you are importing inflation, your own monetary policy has a marginal effect.
Japanese exports to the US slowed 11% YoY. Overall Japanese exports rose 2.3% on increases to the EU and to other Asian countries, but the rate of increase is slowing as well. Japanese bankers are not optimistic and the Japanese finance minister wants the US government to bail out US banks. Since the Japanese government basically followed that policy during their RE collapse, and experienced deflation and two decades of a weak economy as a result, I think the US government should politely decline.
Every time anyone talks about the emerging economies carrying world growth on their shoulders, just think about a few poor Malaysians getting 5-10 USD a day for dismantling a power pylon carrying live lines. The base of the pyramid is getting whittled away day by day.
There are many ways to look at this, but the most interesting to me is that multiple people worked for days and took considerable risks for such a low return. It may well be that they got more than double the official estimate, but that would still generate an astonishingly low daily return.
The cost to the utility was estimated at more than $300,000 USD.
This is inflation in action, and it's why these governments have to maintain subsidies. Raiding a rice warehouse is one thing, but when people start dismantling pylons carrying live wires out of desperation, you have no option. Of course, given that world population is increasing in these countries and that they must subsidize, this really means that the subsidized commodities become price insensitive for a time.
In other recent news, Canada cut 50 basis points, the London commercial RE market looks to be breaking, the Spanish builders are beginning to hold their own fire sales, and the phenomenon of immigrants buying apartments is beginning to crumble.
As for worldwide inflation, it doesn't seem clear to me that it is being affected all that much by monetary policy. Australia, which is likely to raise rates again from its current 7.25%, is currently seeing inflation almost exactly equivalent to the US. When you are importing inflation, your own monetary policy has a marginal effect.
Japanese exports to the US slowed 11% YoY. Overall Japanese exports rose 2.3% on increases to the EU and to other Asian countries, but the rate of increase is slowing as well. Japanese bankers are not optimistic and the Japanese finance minister wants the US government to bail out US banks. Since the Japanese government basically followed that policy during their RE collapse, and experienced deflation and two decades of a weak economy as a result, I think the US government should politely decline.
Every time anyone talks about the emerging economies carrying world growth on their shoulders, just think about a few poor Malaysians getting 5-10 USD a day for dismantling a power pylon carrying live lines. The base of the pyramid is getting whittled away day by day.
Tuesday, April 22, 2008
Wow - Check Out The Exit Polls
I figured Clinton would win PA about 6-8%, but boy, if the age and sex splits on the exit polls are right, she should have won by way more than that.
CNN has the PA exit poll listing women as 58% of the voters and voters aged under 45 only 27% of the total. Since Clinton does better with women and older people.... Demographics matter to economics and politics! A lot!
Exit polls aren't necessarily incredibly reliable, though. According to the ACS, (demographics detail here), PA has a 5.0/4.6 female/male split in the over-18 population. Total population is about 12.4 million. 5.2 million aged over 44. 9.6 million over 18, so it's a 5.2/4.4 >44/<45 ratio. It is true that younger people vote less, especially in primaries, and it is also true that women vote more.
Only about 1.3 ~ 1.4 million of PA's population is black, so if Obama doesn't lose by 10% or so tonight, you can't claim that it is due to the black vote. CNN's exit stats give the black voters as about 15% of the total vote.
Unless Hillary can really bring home the bacon tonight, she has absolutely no argument against Obama. She might as well just fold up her tent and steal away in the night.
CNN has the PA exit poll listing women as 58% of the voters and voters aged under 45 only 27% of the total. Since Clinton does better with women and older people.... Demographics matter to economics and politics! A lot!
Exit polls aren't necessarily incredibly reliable, though. According to the ACS, (demographics detail here), PA has a 5.0/4.6 female/male split in the over-18 population. Total population is about 12.4 million. 5.2 million aged over 44. 9.6 million over 18, so it's a 5.2/4.4 >44/<45 ratio. It is true that younger people vote less, especially in primaries, and it is also true that women vote more.
Only about 1.3 ~ 1.4 million of PA's population is black, so if Obama doesn't lose by 10% or so tonight, you can't claim that it is due to the black vote. CNN's exit stats give the black voters as about 15% of the total vote.
Unless Hillary can really bring home the bacon tonight, she has absolutely no argument against Obama. She might as well just fold up her tent and steal away in the night.
Monday, April 21, 2008
Jerusalem Ahead
A great post (really a series) by Shrinkwrapped about the full meaning of Passover, which I believe can be summed up in this excerpt:
Ben Franklin would recognize the spirit of SW's post. Quotes:
When freedom is valued less than short term security, one ends up with neither short term security nor freedom. When fear of the unknown outweighs the discomfort of the known, one has already made the decision to remain a slave.My personal credo is that no such thing as assurance of personal security can exist, and so to build one's life on seeking that assurance is ultimately self-contradicting and a denial of one's life. All one can do is balance off risks, and never seeking positive expansion of possibilities pretty much dooms you to a declining future.
Ben Franklin would recognize the spirit of SW's post. Quotes:
- They that can give up essential liberty to obtain a little temporary safety, deserve neither liberty or safety...
- Freedom is not a gift bestowed upon us by other men, but a right that belongs to us by the laws of God and nature.
- This will be the best security for maintaining our liberties. A nation of well-informed men who have been taught to know and prize the rights which God has given them cannot be enslaved. It is in the religion of ignorance that tyranny begins.
- ...it is a common observation here that our cause is the cause of all mankind, and that we are fighting for their liberty in defending our own.
- Where liberty dwells, there is my country.
India, My Friends
Before I go back to high finance, I want to take a short tour of India. (And by the way, hope you all had a Happy Passover if you observe it).
India's economy is way more strapped right now than most observers realize. The inflation is hitting relatively hard, with 2007 sales of soap, for example, dropping by five percent. The disappointing performance of the newer retail chains is probably being influenced by the trend.
In India, the equivalent of our new car sales metric is sales of motorbikes. Check out this article about both price increases due to input costs, and the types of sales drops that some companies are experiencing:
Valuations of property companies are collapsing in multiple Asian countries, and India is no exception:
So what is going on in IT firms? They're cutting back spending:
You may find this article about the cuts in IT firm spending quite interesting:
The article assures us that it's just about cheaper coffee and so forth, but Tata has begun to cut:
The Indian government is currently in some turmoil over inflation, which has recently moved to around 7% and appears unlikely to reduce much in the near future. The debate is now focusing on internal cost controls a la Jimmy Carter:
I think the WTO's prediction for 4.5% growth in 2008 world trade is near the high side (it was 5.5% in 2007, and 8.5% in 2006), and I think in particular they discount the accelerating risk of internal trade problems influenced by currency valuation changes within the SE Asian block. The riproaring pace of investment in some of these countries has been fueled by ROW investments, and could prove to be a significant source of instability later in 2008.
** One final note - the impact of inflation on Japan's consumer sector is mounting. The supermarkets are feeling pressure and consumer confidence is dropping rapidly. Demand for real estate dropped 4.8%.
India's economy is way more strapped right now than most observers realize. The inflation is hitting relatively hard, with 2007 sales of soap, for example, dropping by five percent. The disappointing performance of the newer retail chains is probably being influenced by the trend.
In India, the equivalent of our new car sales metric is sales of motorbikes. Check out this article about both price increases due to input costs, and the types of sales drops that some companies are experiencing:
Bajaj Auto, that saw sales falling as much as 20% in the domestic market in the last financial year, has gone for a hike of Rs 500-600 .They are not depressive types. It's a pretty darned good bet that sales aren't going to be rising this year due to credit and inflation issues. Note the pace of overall decline.
...
R Chandramouli, marketing head for TVS Motor, said the company has also raised prices of some of its models. “Overall, the hike is between Rs 200 and Rs 1,000,’’ Chandramouli said.
...
Sales of TVS had dropped 40% in the domestic market last fiscal. In the scenario of a high level of interest rate and not-so-easy retail financing , Chandramouli said, “We feel that sales would be better than last year and there would be marginal growth,’’ he said.
...
The latest hike in input prices came as a big blow for the bike industry that has been struggling to prop up sales growth.
Motyorcycles sales fell 12% last fiscal and companies have been spending a lot on promotional schemes to attract buyers.
Valuations of property companies are collapsing in multiple Asian countries, and India is no exception:
The meltdown in property firms’ valuations in other economies, including India, China, Japan and the UK, has surpassed that of the US with Indian real estate companies witnessing one of the biggest falls. Some leading Indian real estate firms are trading at about 34% discount to their net asset values (NAVs), which implies that property firms are being valued at just two-thirds of the assets they hold.The bubble was relatively bigger in many of the Asian countries and will deflate far more.
This makes India the second-most affected nation after Malaysia in the first quarter of 2008 among key property markets, according to a Citigroup report. Interestingly, in the US, the property market index is trading at just 12% discount to its NAV. Its performance is even better than the global index, which is ruling at an 18% discount.
Indian property stock prices have dropped as much as 50-67% and underperformed the Sensex by 23% in the first quarter of 2008. Such a sharp fall has widened the discount to their NAVs, which was just 1-2% in November ’07. This is despite the fact that Citigroup has lowered the NAVs of Indian property firms by 9-27% in its analysis. Real estate consultancy firm Cushman & Wakefield joint managing director Sanjay Dutt says high interest rates have made property firms with high debt exposure prone to rapid erosion of corporate valuations.Ah. The peak was in January 2008. I recommend reading the entire article. Note that comment about the high-tech segment's changing demands.
He added that each segment of the domestic real estate sector is facing problems: “With the exit of speculators from the residential market, the transaction volume is down by almost 40%. Secondly, a large part of the IT & ITES space is occupied by US and Europe-based MNCs, but in the first quarter of this year, a majority of them didn’t commit to any space and we don’t expect it to change in the second quarter either.
So what is going on in IT firms? They're cutting back spending:
You may find this article about the cuts in IT firm spending quite interesting:
With fears of a possible recession in the US spreading to India, IT and ITeS companies in Hyderabad have begun to cut costs to remain competitive. But this round is not about retrenching staff and reducing wages. Rather, the focus is on cutting out the frills.Words just kinda escape me. If you are making some employees work more, other employees will be working less. It is a truism in the software industry that some good employees will produce 4 to 5 times the effective output of the bottom rank of employees. I think this is what they are really doing.
...
Several companies are also making employees work more by extending the hours, albeit they pay an extra allowance. Yet on the balance the companies are saving money.
The logic is that most IT companies use licenced software which is charged based on the number of systems they are put on. "So, by switching off some systems and using only a few, we are able to save on the licensing fee," an IT operations head revealed.
The article assures us that it's just about cheaper coffee and so forth, but Tata has begun to cut:
After cutting down on variable pay across the board, Tata Consultancy Services has shown the door to 500 employees, citing poor performances as the reason.There has been a severe shortage of good, experienced IT personnel, so this is quite a revolutionary move that must indicate a decline of demand for employees.
...
TCS, in an internal communication to its employees, has said that though the company has met the revenue targets, it has not met the internal economic value added (EVA) targets. EVA is the difference between net profit and the cost of capital. Because of this, it is cutting the variable component of salaries across all levels.
The Indian government is currently in some turmoil over inflation, which has recently moved to around 7% and appears unlikely to reduce much in the near future. The debate is now focusing on internal cost controls a la Jimmy Carter:
Warning that the battle against inflation will fail if states do not join hands with the Centre, commerce and industry Minister Kamal Nath on Sunday said the fresh offensive on price control may include a ban on forward trading and bringing steel under Essential Commodities Act.If you are a middle-aged American, you remember just what happened when good ol' Jimmy tried this.
...
Asked whether the government would ban futures trading, Nath replied, "If forward trading is the reason of inflation, why would not we do it. We want to contain inflation." The government informed Parliament last week that it was awaiting the report of the Abhijit Sen Committee on the impact of futures market on prices and would take a decision if the report is received within 10 days.
As for steel, which has seen a price rise of 49% in the last one year, Nath said if the states failed to rein in inflation, the Centre was prepared to take stern action.
I think the WTO's prediction for 4.5% growth in 2008 world trade is near the high side (it was 5.5% in 2007, and 8.5% in 2006), and I think in particular they discount the accelerating risk of internal trade problems influenced by currency valuation changes within the SE Asian block. The riproaring pace of investment in some of these countries has been fueled by ROW investments, and could prove to be a significant source of instability later in 2008.
** One final note - the impact of inflation on Japan's consumer sector is mounting. The supermarkets are feeling pressure and consumer confidence is dropping rapidly. Demand for real estate dropped 4.8%.
Friday, April 18, 2008
Totally Work Safe This Time
I laughed at this video projecting the 2009 job market. Thanks again, Lance.
It's Friday! It's spring! Oh, and here's LOLFed brought to you by Asparagirl. I asked and I received!
It's Friday! It's spring! Oh, and here's LOLFed brought to you by Asparagirl. I asked and I received!
The Spanish Grumble
The percent of Spanish GDP related to housing construction is much higher than ours, and unfortunately its housing bubble is deflating now too. Iberian Notes is a great blog if you would like to keep track of matters and don't read Spanish.
Estimates for 2008 GDP growth vary. The IMF thinks it could go as low as 1%, government estimates are considerably higher, and the savings banks are now predicting 2% dropping to a bit less than 1% next year and 2009 unemployment rising to 11.3%.
I am guessing that the government doesn't believe their own rhetoric, because their bailout plan is pretty hefty. It is also very like the US plan. 10 billion EU, of which about 6 billion goes to individuals in the form of two 200 EU payments. One of those is in July and another in December. The rest, as explained in Iberian Notes:
Delinquencies are rising sharply. In February the non-depository rate had increased to 3.257%. The overall rate excluding the non-depositories was 1.056%, the highest since 2002. That is not too good considering that the real slowdown is yet to come; housing construction is supposed to contract over 14% next year.
Inflation-adjusted (real) home prices are now dropping. If you read Spanish and have ever read some of the US housing blogs, the tone of the comments will give you a sense of deja vu. Several of the commenters report hefty discounts by builders.
Of course the pain is not contained to Spain. Bloomberg looks at buy-to-let (speculative) housing in the UK:
Estimates for 2008 GDP growth vary. The IMF thinks it could go as low as 1%, government estimates are considerably higher, and the savings banks are now predicting 2% dropping to a bit less than 1% next year and 2009 unemployment rising to 11.3%.
I am guessing that the government doesn't believe their own rhetoric, because their bailout plan is pretty hefty. It is also very like the US plan. 10 billion EU, of which about 6 billion goes to individuals in the form of two 200 EU payments. One of those is in July and another in December. The rest, as explained in Iberian Notes:
The other €4 billion, though, looks like it's mostly free money given out to special interest groups. It will go to 1) aid for small and medium businesses, basically a government subsidy for the petite bourgeoisie 2) guarantees for mortgages on dwellings under "official protection," basically a government subsidy for the banks 3) public works spending, which if done right doesn't have to be a mere government subsidy for the construction industry, but if done wrong will be just that 4) "reordering the energy industry," which sure sounds like a government subsidy for Repsol and the electric and gas utilities 5) paying immigrants to go home, which is of course a government subsidy for said immigrants, and an indirect subsidy for the unions, whose members will face less competition.So the idea is to stimulate employment, get a lot of immigrants out to cut unemployment, and stave off bank losses by paying off a considerable portions of the mortgage losses. Spain has been running a surplus, but the prediction is that by 2009 they will be in budget deficit.Spain has a lot of recent immigration, both legal and illegal. They have both been working in construction and buying homes, so I don't see quite how this can work out.
Delinquencies are rising sharply. In February the non-depository rate had increased to 3.257%. The overall rate excluding the non-depositories was 1.056%, the highest since 2002. That is not too good considering that the real slowdown is yet to come; housing construction is supposed to contract over 14% next year.
Inflation-adjusted (real) home prices are now dropping. If you read Spanish and have ever read some of the US housing blogs, the tone of the comments will give you a sense of deja vu. Several of the commenters report hefty discounts by builders.
Of course the pain is not contained to Spain. Bloomberg looks at buy-to-let (speculative) housing in the UK:
Richard Lee spent 5.3 million pounds ($10 million) buying 20 rental homes across the U.K. with just 150,000 pounds of his own money. Today, the properties are worth about 60 percent less and owned by the banks that financed the purchases.Ouch! I think London is still supposed to be good. The UK budget deficit may become a problem later this year and the next.
...
Lee, 37, bought an apartment in the City Gate 2 development in Manchester for 239,500 pounds in October 2005. An identical property in the same building sold for 115,000 pounds earlier this year, said Lee, who has surrendered his keys to the bank.
Thursday, April 17, 2008
Hold The Mass Suicide!
Okay, the unemployment claims release looks relatively good (for a recession), and Treasury receipts show that small businesses are picking up. In particular, the jobs basis reported increased almost as much in the first quarter as it did last year.
Now if we only had presidential candidates who could add, the picture would be improving. Of course, we don't have that. I read McCain's economic speech and I didn't know whether to laugh or cry. More on that later I guess.
Sorry for the light blogging, but I am very busy because the data is rolling in. I only have time for essentials!
In the spirit of assisting clueless liberal political campaign workers everywhere, I bring you the country-western plan for world peace and a deeper understanding of what those "bitter", prudish, religious "Guns, God and Gays" rural "values voters" in small towns across America are really all about. This is true boob power! Warning, this is not work-safe at all, and you guys will want to see the video. Keep a close eye on that audience! (Thank you, Lance!!!)
It is also why the US will never be conquered and freedom will continue to ring. The free men are too cheerful to be conquered, and the free women are having too much fun cheering up the free men to think of surrender.
For what it's worth, shortly after 9/11 a chain email about how to defeat terrorists was flying around GA banking circles. The assertion was that Islamic terrorists were not terrified of death, but they were terrified of nekkid women, so it was proposed that at Thursday at 7:00, all females should go out and stand nude, thus terrifying the Islamic terrorists right off our homeland. If I am understanding Shrinkwrapped's Arab Mind series correctly, GA bankers are not that far off the mark.
Now if we only had presidential candidates who could add, the picture would be improving. Of course, we don't have that. I read McCain's economic speech and I didn't know whether to laugh or cry. More on that later I guess.
Sorry for the light blogging, but I am very busy because the data is rolling in. I only have time for essentials!
In the spirit of assisting clueless liberal political campaign workers everywhere, I bring you the country-western plan for world peace and a deeper understanding of what those "bitter", prudish, religious "Guns, God and Gays" rural "values voters" in small towns across America are really all about. This is true boob power! Warning, this is not work-safe at all, and you guys will want to see the video. Keep a close eye on that audience! (Thank you, Lance!!!)
It is also why the US will never be conquered and freedom will continue to ring. The free men are too cheerful to be conquered, and the free women are having too much fun cheering up the free men to think of surrender.
For what it's worth, shortly after 9/11 a chain email about how to defeat terrorists was flying around GA banking circles. The assertion was that Islamic terrorists were not terrified of death, but they were terrified of nekkid women, so it was proposed that at Thursday at 7:00, all females should go out and stand nude, thus terrifying the Islamic terrorists right off our homeland. If I am understanding Shrinkwrapped's Arab Mind series correctly, GA bankers are not that far off the mark.
Tuesday, April 15, 2008
Stuff You Have To Read
The picture for corporate debt - Bloomberg.
On mortgages, this article by Linda Lowell hosted at the rightly esteemed Housing Wire. Lowell discusses the changes in modelling that produced the wildly irrational valuations of the recent brand of mortgage securitizations, and the role of the ratings firms. Just one word before you begin. She is correct that they are for-profit entities, but the truth is that the federal regulators ceded regulatory authority to them by making NRSROs (nationally recognized statistical rating organizations) their official benchmarks of risk. The banking regulators used them just like the SEC did, so in essence these organizations became a major part of the regulatory apparatus.
Regarding Egan-Jones (see the NRSRO link above), it was just recognized last December. The ratings game has been a closely-held franchise in which the profit all stemmed from payments from the organizations seeking ratings on their instruments. The conflict of interest is obvious. Egan-Jones was started as an investor-paid ratings firm, and is therefore a different animal; its conclusions have sometimes been notably different than those of other such firms and it has been controversial in certain quarters. More background on the certification, which had been long denied.
However it is stupid to say that the ratings firms misled the banks who were originating funny-money mortgages. If you are writing no/low doc ARMs with funky affordability features for astronomically disproportionate amounts, you either know the risk you are taking or you are exerting great effort not to know it.
On mortgages, this article by Linda Lowell hosted at the rightly esteemed Housing Wire. Lowell discusses the changes in modelling that produced the wildly irrational valuations of the recent brand of mortgage securitizations, and the role of the ratings firms. Just one word before you begin. She is correct that they are for-profit entities, but the truth is that the federal regulators ceded regulatory authority to them by making NRSROs (nationally recognized statistical rating organizations) their official benchmarks of risk. The banking regulators used them just like the SEC did, so in essence these organizations became a major part of the regulatory apparatus.
Regarding Egan-Jones (see the NRSRO link above), it was just recognized last December. The ratings game has been a closely-held franchise in which the profit all stemmed from payments from the organizations seeking ratings on their instruments. The conflict of interest is obvious. Egan-Jones was started as an investor-paid ratings firm, and is therefore a different animal; its conclusions have sometimes been notably different than those of other such firms and it has been controversial in certain quarters. More background on the certification, which had been long denied.
However it is stupid to say that the ratings firms misled the banks who were originating funny-money mortgages. If you are writing no/low doc ARMs with funky affordability features for astronomically disproportionate amounts, you either know the risk you are taking or you are exerting great effort not to know it.
Da Newz Iz Mixed
Maybe we should start a LOLEconomikz site.
Producer Prices show continuing and significant escalation in prices. Release. Table 4.
Labor costs are a much higher component of net output costs for service industries. Over the last six months a lot of cost pressures have been built in.
However, the idea that the economy is collapsing into a severe depression and that all things are getting worse is not supported by data such as Treasury receipts, rail and truck freight, employment data, etc.
Today's Empire State Manufacturing survey reversed its recent highly negative trend:
One of the most optimistic indicators I have is the consistent first quarter rise in federal unemployment tax receipts. Even better, so far in April the YoY increase is accelerating rapidly. That indicates relative strength in the small business sector. Small businesses are one of the accelerator pedals in the US economy - when large businesses falter, more talent and time seems to be shifted to that sector, and then smaller businesses pick up the slack.
It is amazing to see these fundamental stats so strong (reversing several years of YoY decreases) while the auto industry, many retail businesses, financials and housing are experiencing contractions, but that just shows the flexibility of the US economy. This is a classic recession with the classic corrections proceeding in a relatively classic course.
What's not classic about it is that it is extremely drawn out. The manufacturing/production decline extended for almost two years before 2008, troughed in late 2007, and is now resurging. The consumer recession is just truly beginning and will extend for some years.
Treasury receipts April 11th for 2007 & 2008:
Producer Prices show continuing and significant escalation in prices. Release. Table 4.
Table 4. Producer price indexes for the net output of selected industries and industry groups, not seasonally
adjusted
__________________________________________________________________________________________________________________
| | | Index | Percent change
Industry | Industry 1/ |Index|_______________________|to_Mar._2008_from:
code | |base | | | | |
| | |Nov. |Feb. |Mar. | Mar. | Feb.
| | |2007 2/|2008 2/|2008 2/| 2007 | 2008
__________________|______________________________________________|_____|_______|_______|_______|________|_________
| | |
|Total mining, utilities, and manufacturing | |
| industries.................................. |12/06| 106.8 107.8 110.3 8.2 2.3
|Total manufacturing industries............... |12/84| 168.0 169.4 173.4 8.3 2.4
|Total traditional service industries......... |12/06| 102.6 101.9 101.3 1.2 -0.6
Table A. Monthly and annual percent changes in selected stage-of-processing price
indexes, seasonally adjusted
______________________________________________________________________________________
| | | | |
| | Finished goods | | |
| | | | |
| |---------------------------------------------------------| | |
| | | | | | Change in | | |
| | | | | Except |finished goods| Inter- | |
| | | | |foods and|from 12 months| mediate | Crude |
| Month | Total | Foods | Energy | energy | ago(unadj.) | goods | goods |
|--------------------------------------------------------------------------------------|
2007
Mar. 0.9 1.5 3.2 -0.1 3.1 1.0 2.5
Apr. .7 .5 2.6 .2 3.2 1.1 1.0
May .6 -.7 2.9 .2 3.9 1.0 1.0
June .1 -.2 -.3 .2 3.3 .4 .8
July .5 -.1 2.2 .2 4.2 .7 .3
Aug. -.8 0 -4.2 .1 2.3 -.9 -3.5
Sept. .5 1.1 1.2 .1 4.4 0 .9
Oct. .5 1.3 1.1 .1 6.1 .6 4.0
Nov. 2.6 r -.2 11.7 r .3 r 7.3 r 2.9 r 6.8
Dec. r -.4 r 1.2 -3.0 r .1 6.3 r -.1 r 2.4
2008
Jan. 1.0 1.7 1.5 .4 7.4 1.4 2.5
Feb. .3 -.5 .8 .5 6.4 .8 3.7
Mar. 1.1 1.2 2.9 .2 6.9 2.3 8.0
Labor costs are a much higher component of net output costs for service industries. Over the last six months a lot of cost pressures have been built in.
However, the idea that the economy is collapsing into a severe depression and that all things are getting worse is not supported by data such as Treasury receipts, rail and truck freight, employment data, etc.
Today's Empire State Manufacturing survey reversed its recent highly negative trend:
One of the most optimistic indicators I have is the consistent first quarter rise in federal unemployment tax receipts. Even better, so far in April the YoY increase is accelerating rapidly. That indicates relative strength in the small business sector. Small businesses are one of the accelerator pedals in the US economy - when large businesses falter, more talent and time seems to be shifted to that sector, and then smaller businesses pick up the slack.
It is amazing to see these fundamental stats so strong (reversing several years of YoY decreases) while the auto industry, many retail businesses, financials and housing are experiencing contractions, but that just shows the flexibility of the US economy. This is a classic recession with the classic corrections proceeding in a relatively classic course.
What's not classic about it is that it is extremely drawn out. The manufacturing/production decline extended for almost two years before 2008, troughed in late 2007, and is now resurging. The consumer recession is just truly beginning and will extend for some years.
Treasury receipts April 11th for 2007 & 2008:
1 DAILY TREASURY STATEMENT PAGE: 7
Cash and debt operations of the United States Treasury
Friday April 11, 2008
(Detail, rounded in millions, may not add to totals)
___________________________________________________________________________________________
TABLE IV Federal Tax Deposits |
___________________________________________________________________________________________
| | | This | Fiscal |
| Classification | Today | month | year |
| | | to date | to date |
___________________________________________________________________________________________
Withheld Income and Employment Taxes $ 5,486 $ 61,900 $ 998,862
Individual Income Taxes 483 1,549 5,526
Railroad Retirement Taxes 39 147 2,577
Excise Taxes 88 727 31,408
Corporation Income Taxes 658 1,596 157,637
Federal Unemployment Taxes 18 123 2,459
Estate and Gift Taxes & Misc IRS Rcpts. 4 32 397
Change in Balance of Unclassified
Taxes 24 148 157
Total 6,800 66,223 1,199,024
These Receipts were deposited in:
Federal Reserve Account:
Directly 96 637 19,629
Collector Depositaries 1,594 15,892 279,843
Tax and Loan Accounts 5,086 47,007 863,943
Inter-agency Transfers 24 2,687 35,608
TABLE V Tax and Loan Note Accounts by Depositary Category |
2007:
1 DAILY TREASURY STATEMENT PAGE: 7
Cash and debt operations of the United States Treasury
Wednesday April 11, 2007
(Detail, rounded in millions, may not add to totals)
___________________________________________________________________________________________
TABLE IV Federal Tax Deposits |
___________________________________________________________________________________________
| | | This | Fiscal |
| Classification | Today | month | year |
| | | to date | to date |
___________________________________________________________________________________________
Withheld Income and Employment Taxes $ 6,659 $ 59,232 $ 950,939
Individual Income Taxes 173 769 3,567
Railroad Retirement Taxes 25 170 2,523
Excise Taxes 383 665 31,736
Corporation Income Taxes 192 906 168,111
Federal Unemployment Taxes 18 113 2,441
Estate and Gift Taxes & Misc IRS Rcpts. 6 32 438
Change in Balance of Unclassified
Taxes -28 199 199
Total 7,430 62,085 1,159,955
These Receipts were deposited in:
Federal Reserve Account:
Directly 85 826 22,211
Collector Depositaries 3,238 15,703 275,171
Tax and Loan Accounts 4,067 43,493 829,793
Inter-agency Transfers 40 2,063 32,780
TABLE V Tax and Loan Note Accounts by Depositary Category |
What you are looking at is a redistribution of economic impetus away from the coasts and into the heartland,
away from bubblenomic banking and into fundamental production, and away from glitzy industries and into
the old fashioned stalwarts.
Monday, April 14, 2008
Food Prices And Currencies
You know the potential for an Asian currency crisis I claimed could be a consequence of food prices? Read this Bloomberg article:
The net result over six months to a year should be to greatly weaken consumer capacity in several previously quickly growing nations.
Record prices for rice, wheat, milk and cooking oil are wreaking havoc with currencies in Southeast Asia, causing a slump in the peso and Indonesia's rupiah. Investors from Deutsche Asset Management to Fortis Investments are dumping their bondholdings on concern inflation will erode returns, putting further pressure on exchange rates. The region has come to depend on strong currencies to contain the rising cost of food and fuel imports.This is really a serious problem given the other global instabilities.
``You can't just rely on currencies to fight inflation, as there comes a time when they have no potential to appreciate further,'' said Nicolas Schlotthauer, a money manager who helps oversee $5 billion at Deutsche Asset Management, part of Germany's largest bank, in Frankfurt. ``Everyone is so complacent about the fact that if there's inflationary pressure, they will let their currencies appreciate. No one thought of potential currency weakness.''
The net result over six months to a year should be to greatly weaken consumer capacity in several previously quickly growing nations.
Is It Me?
I'm so disturbed by CNN's "presidential faith forum" that I am wondering if I am reacting in some idiosyncratic way? Here's the transcript.
I do not like having political candidates invited to talk about their relationship to the Holy Spirit. It is not because I am against religion. I am very religious in a pretty fundamentalist Christian way, so that is not the problem.Talking about one's faith is appropriate in church or temple, but should this type of question have any place in a political context?
Those who claim otherwise are either idiots who do not understand the Constitution or fools who understand it but believe that it would be wise to subvert it. As long as individuals have basic moral tenets, those fundamental precepts will underpin a lot of political measures. There is no way of avoiding that.
But who can debate or discuss someone's relationship with the Holy Spirit? It is not even proper in the Christian tradition to do so outside of certain extremely prescribed bounds. For one thing, doing so places people into the risk of blaspheming the Holy Spirit, which Jesus put in an utterly different category of sin - sin that cannot be forgiven. So a Christian who encourages other Christians to start talking about the Holy Spirit in such a context is doing something equivalent to sending one's kids out to play ball on the highway median. It's just not right!
Nor does religion inform, for example, the question of environmentalism:
It raises my opinion of McCain that he did not participate.
I don't want to write very much about this, because I will fall into the same error I believe this forum displays. I will close by pointing out that if Lieberman were a presidential candidate, I do not believe that this forum would have been held, or at least not held in this way. That would not have been the least beneficial consequence of his candidacy.
Maybe it's me. Maybe it's not. I would like to get other people's reactions, because I was amazed at the strength of my aversion.
I do not like having political candidates invited to talk about their relationship to the Holy Spirit. It is not because I am against religion. I am very religious in a pretty fundamentalist Christian way, so that is not the problem.Talking about one's faith is appropriate in church or temple, but should this type of question have any place in a political context?
BROWN: Let's talk about your faith. And we warned people the questions tonight would be pretty personal. So I want to ask you. You said in an interview last year that you believe in the Father, Son and the Holy Spirit. And you have actually felt the presence of the Holy Spirit on many occasions.This totally perturbs me. It's not because of this concern that it does:
Share some of those occasions with us.
And, Senator, there are a lot of Americans who are uncomfortable with the conversation that we're having here tonight. That they believe religion already has way too much influence in political life and public life. How do you reassure them?The political ramifications of people's private philosophies and faiths are a proper matter of external political debate, because they have external real-world ramifications that CAN be debated. If you believe that the lives of the other human beings walking around out there have as much importance as your own, surely that is going to become evident in your policy recommendations. Their proper place is in the policy debate, and not first and foremost in a religious framework. So of course private beliefs do end up in the public square, and they have every right to be there.
Those who claim otherwise are either idiots who do not understand the Constitution or fools who understand it but believe that it would be wise to subvert it. As long as individuals have basic moral tenets, those fundamental precepts will underpin a lot of political measures. There is no way of avoiding that.
But who can debate or discuss someone's relationship with the Holy Spirit? It is not even proper in the Christian tradition to do so outside of certain extremely prescribed bounds. For one thing, doing so places people into the risk of blaspheming the Holy Spirit, which Jesus put in an utterly different category of sin - sin that cannot be forgiven. So a Christian who encourages other Christians to start talking about the Holy Spirit in such a context is doing something equivalent to sending one's kids out to play ball on the highway median. It's just not right!
Nor does religion inform, for example, the question of environmentalism:
And where I think potentially religious faith and the science of global warming converge is precisely because it's going to be hard to deal with.Blahblahblah. Is is really true that an atheist or agnostic would be less convinced that the planet will be around after he is dead, or that preserving the environment is less important for his children? Give me a break! How darned insulting! I have railed against the Bill Moyers' type of "fundamentalists want to drown your children" rhetoric, but you know, two wrongs don't make a right. Whether one believes that a carbon cap and trade system is good policy is going to be based on the degree of CO2-based danger you perceive and the likely immediate effects of such a system. I doubt atheism or faith will make a difference. This is an example of how faith should not be used in public debate.
We have to find resources in ourselves that allow us to make those sacrifices where we say, you know what? We're not going to leave it to the next generation. We're not going to wait.
OBAMA: We are going to put in place a cap-and-trade system that controls the amount of greenhouse gases that are going into the atmosphere. And we know that that requires us to make adjustments in terms of how we use energy. We've got to be less wasteful, both as a society and in our own individual lives.
And having faith, believing that this planet and this world extends beyond us, it's not just here for us, but it's here for, you know, more generations to come. I think religion can actually bolster our desire to make those sacrifices now.
It raises my opinion of McCain that he did not participate.
I don't want to write very much about this, because I will fall into the same error I believe this forum displays. I will close by pointing out that if Lieberman were a presidential candidate, I do not believe that this forum would have been held, or at least not held in this way. That would not have been the least beneficial consequence of his candidacy.
Maybe it's me. Maybe it's not. I would like to get other people's reactions, because I was amazed at the strength of my aversion.
Sunday, April 13, 2008
When Jane Smiley Gets On Board...
When Jane Smiley gets on board, your campaign ship is sinking in small-town America.
Yes, THAT Jane Smiley has weighed in in great excitement over Obama's reprise of Dean's "guns, God and gays" remark of 2004. Naturally Jane thinks Obama's hit the nail on the head:
Volokh has the best overall package of what Obama said, including audio, transcript and then his unfortunate attempt to clarify. The SF Fundraiser blip:
Then his response kind of put the icing on the cake:
As to bitterness and religion, these are very unfortunate comments juxtaposed with the controversy over Wright and the Church of the Black Jesus Who Is Absolutely Not Jewish. When you have been sitting in a church in which "God Damn America" pops up in the sermons, you'd be well advised to leave other people's religious affiliations alone.
To imply that people's faiths are born of frustration and bitterness is a severe misstep. For one thing, it's not true. The Great Awakening, De Tocqueville and a long history of religious movements in this country predate current economic conditions in small towns. Indeed, anyone who has not read de Tocqueville's Democracy in America should read at least this chapter entitled "Principal Causes Which Tend To Maintain The Democratic Republic In The United States" to absorb de Tocqueville's impressions of the role religion played not in government but in culture. Judge for yourself whether this still is not true:
It's not the people in the small towns who are wrong about this. It is a genuine evil. The situation isn't fair to anyone, and the federal government should have responded long ago. Attempting to blame the people for recognizing the situation is stupid, and exemplifies the Washington disconnect.
The issue of guns: This is an issue for many Democrats. When you are telling people that they shouldn't be allowed to keep their father's rifle in their home, you are telling them that they are not trusted. Of course it's made even worse when there is a crime wave going on, isn't it? People didn't suddenly turn to guns. People in the US have always had guns. The Second Amendment was put in the Bill of Rights due to fears that Congress would attempt to disarm the states, and the Bill of Rights arose because the people of that time wouldn't ratify the US Constitution in several states due to worry about the potential for a federal government to overreach itself. This is not a new issue, and it's a losing one for the Democrats.
Gay marriage: I doubt very much that most people are voting on issues like gay marriage. However, to the extent they are, it's due to distaste at having judges shove this stuff down their throats and a deep distrust of gay culture per se, which largely exalts the dysfunctional. It doesn't take many pictures of babies in strollers at extremely decadent CA gay cultural events before people think it's time to put a lid on this. I am pretty sure that everywhere in the country there is massive assent to the idea that gays and lesbians should not persecuted or discriminated against, but that's quite different from wholesale approbation. To the average individual, marriage is about protecting children and monogamy, and the straight population can get riled by only one excerpt of one GLBT pontificator explaining that gay marriage will help educate those unreasonable straights about the illogic of expecting monogamy. Unfortunately there hasn't been just one.
Anti-trade. Here Obama is discussing anti-free trade sentiment, but of course there is considerable wrath over this. You can't create a situation in which the real incomes of the bottom half of the population are stagnant or declining and not expect to see some push-back. The federal government has followed a free-trade policy that exported a lot of jobs, combined with wide-open illegal immigration and an unwillingness to enforce sanctions against employers of illegal immigrants. The combination of those policies has resulted in a bad economic and social situation. I believe that the current changes in currency valuations are about to turn this trend around, but it will take a lot to correct the effects of prior policies.
Obama's basic failure is the failure to respect the concerns of the population, which is a very bad error for a US politician. It will not be fatal, yet. He's going to have to correct this, though. DC is out of touch. The US government has made multiple policy changes over the last 20 years which have hurt the people of the US. Those include relaxing controls over financial institutions without implementing a correspondingly increased regulatory regime, allowing wide-scale illegal immigration, which created a subservient, marginalized class and drove down the wages of the average worker, negotiating free-trade treaties which were sometimes quite imbalanced, and overspending on a monumental basis.
The people of the US do not need to apologize to the federal government for their complaints. The politicians in the federal government need to sit down and take those complaints seriously.
In conclusion, I would like to quote once more from the same chapter I linked above:
Dr M. thinks that Obama has no chance now of winning the general election. I'm not sure - there is a lot of time yet. But this was startlingly tone-deaf. The Anchoress merely raises an eyebrow and snorts in an elegantly pithy manner.
The single most appropriate blog post I have ever read on this topic is not about Obama's remarks at all. It is by SC&A, and it is entitled "Progress and Failure, Part One". In it he discusses the difference between adaptive cultures and cultures dominated by shame:
Yes, THAT Jane Smiley has weighed in in great excitement over Obama's reprise of Dean's "guns, God and gays" remark of 2004. Naturally Jane thinks Obama's hit the nail on the head:
So now, Barack Obama tells the truth about conditions as we know them--that the countryside and the small towns are dying in many places in our country, and that the corporatocracy doesn't care enough to do a thing about it. He points out that immigrant-baiting, gay-baiting, gun-baiting, and religious pandering have helped to destroy those towns and that countryside, that those being destroyed have been cynically enlisted by their very own destroyers to provide the votes that help accomplish the destruction. And this is what Senator Hillary Clinton says about it: "Senator Obama's remarks were elitist and out of touch. They are not reflective of the values and beliefs of Americans."Etc. This is the Smiley creature who exploded in 2004 over "The Unteachable Ignorance of the Red States":
From Senator Clinton's remarks, I infer that to actually see what has gone on in the US in the last 20 years is unAmerican. It doesn't matter who you are, where you were born, what you pay in taxes, what else you might have contributed to the culture, how you vote, who you support. If you don't support fundamentalist religion, job outsourcing, and free access to guns, then you are not even American.
Ignorance and bloodlust have a long tradition in the United States, especially in the red states. There used to be a kind of hand-to-hand fight on the frontier called a "knock-down-drag-out," where any kind of gouging, biting, or maiming was considered fair. The ancestors of today's red-state voters used to stand around cheering and betting on these fights.Got it. The foul beasts in Kansas are just dragging the whole country down.
...
Listen to what the red state citizens say about themselves, the songs they write, and the sermons they flock to. They know who they are—they are full of original sin and they have a taste for violence. The blue state citizens make the Rousseauvian mistake of thinking humans are essentially good, and so they never realize when they are about to be slugged from behind.
Volokh has the best overall package of what Obama said, including audio, transcript and then his unfortunate attempt to clarify. The SF Fundraiser blip:
I think they're misunderstanding why the demographics in our, in this contest have broken out as they are. Because everybody just ascribes it to 'white working-class don't wanna work -- don't wanna vote for the black guy.' That's ... there were intimations of that in an article in the Sunday New York Times today -- kind of implies that it's sort of a race thing.This was unfortunate, and it seems to me that Jane Smiley's got the antipathy to people who aren't like her trophy all tied up, so it's doubly unfortunate. I am highly doubtful that small-town America is more bigoted in any way than urban America on the whole.
Here's how it is: in a lot of these communities in big industrial states like Ohio and Pennsylvania, people have been beaten down so long, and they feel so betrayed by government, and when they hear a pitch that is premised on not being cynical about government, then a part of them just doesn't buy it. And when it's delivered by -- it's true that when it's delivered by a 46-year-old black man named Barack Obama (laugher), then that adds another layer of skepticism (laughter).
But -- so the questions you're most likely to get about me, 'Well, what is this guy going to do for me? What's the concrete thing?' What they wanna hear is -- so, we'll give you talking points about what we're proposing -- close tax loopholes, roll back, you know, the tax cuts for the top 1 percent. Obama's gonna give tax breaks to middle-class folks and we're gonna provide health care for every American. So we'll go down a series of talking points.
But the truth is, is that, our challenge is to get people persuaded that we can make progress when there's not evidence of that in their daily lives. You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. So it's not surprising then that they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.
Then his response kind of put the icing on the cake:
And for 25, 30 years Democrats and Republicans have come before them and said we’re going to make your community better. We’re going to make it right and nothing ever happens. And of course they’re bitter. Of course they’re frustrated. You would be too. In fact many of you are. Because the same thing has happened here in Indiana. The same thing happened across the border in Decatur. The same thing has happened all across the country. Nobody is looking out for you. Nobody is thinking about you. And so people end up -- they don’t vote on economic issues because they don’t expect anybody’s going to help them. So people end up, you know, voting on issues like guns, and are they going to have the right to bear arms. They vote on issues like gay marriage. And they take refuge in their faith and their community and their families and things they can count on. But they don’t believe they can count on Washington.The thing is, people are frustrated. But I think Obama may be a bit out of touch with why people are frustrated and what kind of change they want to see.
...
I know what’s going on in Pennsylvania. I know what’s going on in Indiana. I know what’s going on in Illinois. People are fed-up. They’re angry and they’re frustrated and they’re bitter. And they want to see a change in Washington and that’s why I’m running for President of the United States of America.
As to bitterness and religion, these are very unfortunate comments juxtaposed with the controversy over Wright and the Church of the Black Jesus Who Is Absolutely Not Jewish. When you have been sitting in a church in which "God Damn America" pops up in the sermons, you'd be well advised to leave other people's religious affiliations alone.
To imply that people's faiths are born of frustration and bitterness is a severe misstep. For one thing, it's not true. The Great Awakening, De Tocqueville and a long history of religious movements in this country predate current economic conditions in small towns. Indeed, anyone who has not read de Tocqueville's Democracy in America should read at least this chapter entitled "Principal Causes Which Tend To Maintain The Democratic Republic In The United States" to absorb de Tocqueville's impressions of the role religion played not in government but in culture. Judge for yourself whether this still is not true:
In the United States, if a politician attacks a sect, this may not prevent the partisans of that very sect from supporting him; but if he attacks all the sects together, everyone abandons him, and he remains alone.About the anti-immigrant stuff: As far as I can tell, almost all of the animus is about illegal immigration, and that's not really the same thing as being anti-immigrant. The problem with the vast swell of illegal immigration is that it does push down wages for the remaining jobs. That is why employers have been hiring these people. It also creates a situation in which the illegal immigrants are easily exploited by employers, and it creates a situation in which many illegal immigrants can't get driver's licenses, etc. So you have a situation in which there is essentially one law for legal residents (immigrants or not), and another law for illegals. Drive without a license or insurance as a legal resident in the US, and you will get the book thrown at you. As an illegal, most of the time you are just given a pass. It's not the fault of the police - what are they supposed to do? But the ensuing situation is destructive to social order. A lot of these people are here using fake IDs, etc, so illegals generally aren't held accountable for smaller offenses.
It's not the people in the small towns who are wrong about this. It is a genuine evil. The situation isn't fair to anyone, and the federal government should have responded long ago. Attempting to blame the people for recognizing the situation is stupid, and exemplifies the Washington disconnect.
The issue of guns: This is an issue for many Democrats. When you are telling people that they shouldn't be allowed to keep their father's rifle in their home, you are telling them that they are not trusted. Of course it's made even worse when there is a crime wave going on, isn't it? People didn't suddenly turn to guns. People in the US have always had guns. The Second Amendment was put in the Bill of Rights due to fears that Congress would attempt to disarm the states, and the Bill of Rights arose because the people of that time wouldn't ratify the US Constitution in several states due to worry about the potential for a federal government to overreach itself. This is not a new issue, and it's a losing one for the Democrats.
Gay marriage: I doubt very much that most people are voting on issues like gay marriage. However, to the extent they are, it's due to distaste at having judges shove this stuff down their throats and a deep distrust of gay culture per se, which largely exalts the dysfunctional. It doesn't take many pictures of babies in strollers at extremely decadent CA gay cultural events before people think it's time to put a lid on this. I am pretty sure that everywhere in the country there is massive assent to the idea that gays and lesbians should not persecuted or discriminated against, but that's quite different from wholesale approbation. To the average individual, marriage is about protecting children and monogamy, and the straight population can get riled by only one excerpt of one GLBT pontificator explaining that gay marriage will help educate those unreasonable straights about the illogic of expecting monogamy. Unfortunately there hasn't been just one.
Anti-trade. Here Obama is discussing anti-free trade sentiment, but of course there is considerable wrath over this. You can't create a situation in which the real incomes of the bottom half of the population are stagnant or declining and not expect to see some push-back. The federal government has followed a free-trade policy that exported a lot of jobs, combined with wide-open illegal immigration and an unwillingness to enforce sanctions against employers of illegal immigrants. The combination of those policies has resulted in a bad economic and social situation. I believe that the current changes in currency valuations are about to turn this trend around, but it will take a lot to correct the effects of prior policies.
Obama's basic failure is the failure to respect the concerns of the population, which is a very bad error for a US politician. It will not be fatal, yet. He's going to have to correct this, though. DC is out of touch. The US government has made multiple policy changes over the last 20 years which have hurt the people of the US. Those include relaxing controls over financial institutions without implementing a correspondingly increased regulatory regime, allowing wide-scale illegal immigration, which created a subservient, marginalized class and drove down the wages of the average worker, negotiating free-trade treaties which were sometimes quite imbalanced, and overspending on a monumental basis.
The people of the US do not need to apologize to the federal government for their complaints. The politicians in the federal government need to sit down and take those complaints seriously.
In conclusion, I would like to quote once more from the same chapter I linked above:
America has no great capital city 1 whose direct or indirect control of the majority of the nation, will be independent of the town population and able to repress its excesses.This is the evil small town America sees, and why it does not trust Washington. Rightly or wrongly, the perception is that the political life of the country is in the hands of a small coterie which is extremely remote from the average citizen. Washington politicians have overwhelmingly pursued the smaller interest groups and the big money of lobbyists over the last 20 or 30 years. It is time now for them to turn their attention to the general welfare.
To subject the provinces to the metropolis is therefore to place the destiny of the empire not only in the hands of a portion of the community, which is unjust, but in the hands of a populace carrying out its own impulses, which is very dangerous. The preponderance of capital cities is therefore a serious injury to the representative system; and it exposes modern republics to the same defect as the republics of antiquity, which all perished from not having known this system.
Dr M. thinks that Obama has no chance now of winning the general election. I'm not sure - there is a lot of time yet. But this was startlingly tone-deaf. The Anchoress merely raises an eyebrow and snorts in an elegantly pithy manner.
The single most appropriate blog post I have ever read on this topic is not about Obama's remarks at all. It is by SC&A, and it is entitled "Progress and Failure, Part One". In it he discusses the difference between adaptive cultures and cultures dominated by shame:
In a modern, progressive society, failure is the most accurate predictor of success. Where failures are understood to be instructive and corrective in nature, societies flourish. In cultures where failure is always regarded only as a source of shame, embarrassment or humiliation, societies usually cannot sustain themselves.Obama's remarks about small town America and Smiley's speechifications are founded on a well-disguised shame-based culture. What they would offer is welfare, whereas what small-town America wants is opportunity. Obama comes close to asserting that small-town America is shamed and lashing out in aimless frustration, but that is a complete untruth.
Saturday, April 12, 2008
Speaking Of Credulity
It's not just the Spanish who have this little credulity problem.
Carl at No Oil For Pacifists posted regarding the 9/11 beliefs of Richard Falk, who has just been unanimously elected to the head of the UN Human Rights Commission that is supposed to monitor human rights issues in the Israeli/Palestinian standoff.
Among Mr Falk's qualifications is that he was an international law professor at Princeton University. Of course! And he is distinguished for his openmindedness and critical thinking abilities, as demonstrated by this lovely quote:
What's really amusing is that this latest statement emerged on Kevin Barrett's radio show. Our Kevin is the wackjob who proposed to teach 9/11 conspiracy theory in his introductory level "Islam, Religion and Culture" course at UW-Madison. Among the other features of that theory is the remarkable assertion that steel does not melt from hydrocarbon fires, a contention that makes welders mysterious Merlins and rewrites human technological history.
Anyway, Barrett is now hanging out on two radio shows, one of which is named "Truth Jihad Radio", from which platform he disseminates his enlightened views on free speech and capital punishment:
As for Mr. Falk, he claims that the Palestinian situation now is equivalent to Hitler's tactics. See his 2007 paper "Slouching Toward A Palestinian Holocaust":
Here is Richard Falk's 2004 foreword to David Ray Griffin's "The New Pearl Harbor". A selection of Falk's papers can be found here. The "dialectic" has a distinctive brand of verbose and exalted obfuscation.
Carl at No Oil For Pacifists posted regarding the 9/11 beliefs of Richard Falk, who has just been unanimously elected to the head of the UN Human Rights Commission that is supposed to monitor human rights issues in the Israeli/Palestinian standoff.
Among Mr Falk's qualifications is that he was an international law professor at Princeton University. Of course! And he is distinguished for his openmindedness and critical thinking abilities, as demonstrated by this lovely quote:
On March 24 in an interview with a radio host and former University of Wisconsin instructor, Kevin Barrett, Mr. Falk said, "It is possibly true that especially the neoconservatives thought there was a situation in the country and in the world where something had to happen to wake up the American people. Whether they are innocent about the contention that they made that something happen or not, I don't think we can answer definitively at this point. All we can say is there is a lot of grounds for suspicion, there should be an official investigation of the sort the 9/11 commission did not engage in and that the failure to do these things is cheating the American people and in some sense the people of the world of a greater confidence in what really happened than they presently possess."And also the manhunts, Mr Falk! Don't forget the North Carolina and Virginia manhunts! In 2004 Richard Falk wrote the foreword to Griffin's book claiming that the US attacked itself, so in fairness to Mr. Falk one would have to say that he did not adopt this theory as a UN Human Rights campaign strategy. He's been barmy for a while, to put it in Brit-speak. One would say that Mr. Falk has spent too much time sniffing the academic glue in extremely progressive Princeton University circles.
What's really amusing is that this latest statement emerged on Kevin Barrett's radio show. Our Kevin is the wackjob who proposed to teach 9/11 conspiracy theory in his introductory level "Islam, Religion and Culture" course at UW-Madison. Among the other features of that theory is the remarkable assertion that steel does not melt from hydrocarbon fires, a contention that makes welders mysterious Merlins and rewrites human technological history.
Anyway, Barrett is now hanging out on two radio shows, one of which is named "Truth Jihad Radio", from which platform he disseminates his enlightened views on free speech and capital punishment:
In Fall 2006 Kevin Barrett began hosting a talk show twice a week on the GCN called "The Dynamic Duo," and another talk show, hosted weekly on RBN, titled "Truth Jihad Radio." The topic of both shows is mainly conspiracy theories surrounding 9/11.Irving and Zundel? Finding Mr. Falk on Barrett's radio show is alarming to say the least.
Barrett's controversial views on Jews and Zionism came under focus in late 2006 when statements from an email exchange were documented in which he stated, "As a rational person who is not a specialist in the subject of WWII, but who has studied the history of Zionist Big Lies vis-a-vis Palestine, I cannot possibly dismiss the arguments of people like Green, Irving, and even Zundel."[15][16] Some activists have also commented on a pattern of public statements by Barrett suggestive of violence toward reporters and journalists, such as, "journalists who act as propagandists for war crimes may one day find themselves on the scaffold," and "anybody who has drawn a paycheck from the major mainstream journalistic outlets in the past should be up on the scaffold for the crimes of high treason and crimes against humanity."[17]
As for Mr. Falk, he claims that the Palestinian situation now is equivalent to Hitler's tactics. See his 2007 paper "Slouching Toward A Palestinian Holocaust":
There is little doubt that the Nazi Holocaust was as close to unconditional evil as has been revealed throughout the entire bloody history of the human species. Its massiveness, unconcealed genocidal intent, and reliance on the mentality and instruments of modernity give its enactment in the death camps of Europe a special status in our moral imagination.It goes on, and it is painful to read. Needless to say Israel has denied this man a visa and rejected his appointment. A person who does not know the difference between actual mass murder and the Palestinian situation is either insane or malign. One fascinating feature of Falk's attitudes is that he never actually gets down to proposing any solutions.
...
Against this background, it is especially painful for me, as an American Jew, to feel compelled to portray the ongoing and intensifying abuse of the Palestinian people by Israel through a reliance on such an inflammatory metaphor as ‘holocaust.’
...
Is it an irresponsible overstatement to associate the treatment of Palestinians with this criminalized Nazi record of collective atrocity? I think not.
...
Even if the pressures exerted on Gaza were to be acknowledged as having genocidal potential and even if Israel’s impunity under America’s geopolitical umbrella is put aside, there is little assurance that any sort of protective action in Gaza would be taken. There were strong advance signals in 1994 of a genocide to come in Rwanda, and yet nothing was done to stop it; the UN and the world watched while the 1995 Srebrenica massacre of Bosnians took place, an incident that the World Court described as ‘genocide’ a few months ago; similarly, there have been repeated allegations of genocidal conduct in Darfur over the course of the last several years, and hardly an international finger has been raised, either to protect those threatened or to resolve the conflict in some manner that shares power and resources among the contending ethnic groups.
But Gaza is morally far worse, although mass death has not yet resulted.
Here is Richard Falk's 2004 foreword to David Ray Griffin's "The New Pearl Harbor". A selection of Falk's papers can be found here. The "dialectic" has a distinctive brand of verbose and exalted obfuscation.
