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Wednesday, May 07, 2008

Roundup of News

March European retail sales fell 1.6% on a YoY basis. That's pretty steep, and much worse results than the US is seeing. In Germany they fell 1.1%; in France sales were down 0.8%. The Euro traded down as a result.

US oil usage is declining, but global oil consumption is rising. Those who say higher taxes are needed to discourage consumption should think again. What's needed is either more domestic production of oil, or alternate domestic production of energy. If we bothered to get up and do it, the decline in our trade imbalance would be amazing. That change would support our economy as we go through the difficult demographic period when the baby boomers retire.

Hmm,. It turns out there is more to subcutaneous fat than previously thought - in some places it protects against diabetes? So I guess women with thunder thighs shouldn't worry?

The situation in Myanmar (Burma) remains bad. Supposedly some UN supplies are trickling in. New teams have not arrived. The US has some naval assets in the area and has asked that the government permit disaster assessment teams to go in. To make a very bad situation even worse, Irawaddy reports that the rice-producing region has been very badly hit. Burma doesn't import rice, but depending on how bad the losses are, they may have to. But the people can't pay the prices.

Update: Vallejo, CA is filing for bankruptcy. It's really over pension costs. In another attempt to shore up banks, the Fed is considering asking Congress for authority to pay interest on bank reserves:
The central bank isn't authorized by Congress to begin making such payments until 2011. Allowing interest on bank reserves may allow the Fed to pump more funds into the banking system without pushing its main policy rate lower, in effect separating action to boost liquidity from monetary policy.

``It would have the effect of putting a floor under the federal funds rate,'' said Walker Todd, a research fellow at the American Institute for Economic Research in Great Barrington, Massachusetts.
I repeat that I think the Fed will stop cutting until the EU economy worsens enough to send US manufacturing on another leg down.

Do you mean more consumption or less? Why would more consumption help?
Oops. Thanks. I meant more production!!
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