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Tuesday, December 29, 2009

Still Coping With The Chief

Somewhat successfully. He has been diagnosed by the specialty hospital as having a rare type of angina involving only the smaller vessels. However the real problem was diagnosed by SuperDoc; he has GERD. Stomach acid is flowing back into his esophagus and is causing breathing problems when he inhales it, which exacerbates his stress and causes his blood pressure to go up.

But the Chief decided to eat pork chops last night, so today he is not having a good day. He'll live and learn. I made him do asthma breathing for an hour, and his blood pressure plummeted. This is, btw, how most classically-trained people do science and medicine is science. Observation, testing/experiment, theory formation, prediction, observational confirmation.

Climate Science, on the hand, is now proven to work along the lines of Theory - Observations - Try to Seize Control of Observations and Fix Them To Match Theory - Declare Victory - Upon Failure To Shut Up Critics, Try To Seize Control of All Publications - Upon Failure, Declare Critics Traitors Who Should Be Shot. I have been laughing uncontrollably at the blithe ability to go on defending CO2 Catastrophic Warming theory even after the proof that whatever it is, it ain't science surfaced. All I can say to any reader of the this blog who still thinks these people have any credibility whatsoever is that if any person offers to give you a free pair of undies that will protect your family jewels from the harmful effect of increased radiation while flying, resist your impulse to accept! Pause! Reflect!

Regarding the Roasted Scrotum Terrorist, I am somewhat ashamed to admit that I spent all weekend laughing over this Casey Serin-like attempt at mass murder. I cannot feel that this is a public relations hit; one suspects that the next candidate will think twice before donning the latest in the Charred Ballz (TM) line of Yemen designer undies. Yes, they ARE trendy, but is the discomfort worth the styling?

IMO it also brings up questions over the quality of the education at the University College London's engineering school. This dude graduated from UCL with a degree in mechanical engineering, and he didn't know enough to ask "What happens if the explosive briefs don't work as planned?" Engineers should be a little more failure-conscious than that. It seems to me that even if the Baddaboom Briefs had worked, the explosion might well not have blown through the side of the airplane, although the surrounding passengers would have been showered with pieces of scrotum and guts in a truly disgusting manner. Perhaps that is enough of an aspiration for the average UCL ME grad. However the prospect of roasting your chestnuts and toasting your wienie over an open fire has got to be daunting. My guess is that Kid Terrorist did not even consider it. It does make for some great new versions of standard Christmas carols, so you can't say he won't be memorialized in song.

Perhaps it is best that this dingbat will never be an actively practicing engineer; he might well have killed quite a few people inadvertently if he had actually tried to work for a living. This kid was president of the Islamic Student Council at UCL. It is nice to know that UCL provides a well-rounded multi-cultural educational experience even if it does not actually do so well at the education thang. Maybe that is their plan; the would-be terrorists will not be very successful at the execution stage due to their Mad Terrorist Skillz.

It did not help my attempt to regain sobriety when the early US adminstration pronouncements veered into broad farce, such as Napolitano's attempt to convince us that US security plans were working just fine. One would logically draw the conclusion that the SuperSecret US Security Plan is to attract incompetent terrorists rather than to stop terrorists. All in all, only Mel Brooks could do justice to this incident, and unfortunately, he is dead. Mel, we mourn you.

TechnoBuddha had a very similar reaction to mine; he felt there was a huge viral marketing potential in this incident. As an example, he recommends that MasterCard do a low budget version of their ad campaign using this theme ("Intact Scrotum - Priceless! For everything else there's MasterCard") and release it on YouTube. I think they should add a few words about the benefits of credit card money-back guarantees for defect purchases.

Regular blogging will resume soon. I have even gone to the trouble of making some beyootiful graphs showing real hockey sticks over bank chargeoffs.

Saturday, December 26, 2009


Depending on which retail figures you use, this year's same store retail sales were either decent or down.

ICSC has been the more positive, and this is their reporting for the week ended the 22nd.

Overall the pattern has been that lower-end stores have done considerably better, but higher-end chains are still taking a beating, with the possible exception of stores catering to teens and young adults.

A Bloomberg article sums up the confusion:
The Washington-based National Retail Federation was holding to its forecast for a 1 percent drop in holiday sales, Ellen Davis, a spokeswoman, said Dec. 20. The International Council of Shopping Centers reiterated on Dec. 22 its forecast for a 2 percent increase in sales at stores open at least a year in December, after reporting that the storm slowed growth to 0.4 percent year over year in the week ended Dec. 19.
Oh well.

The ICSC consumer survey was quite interesting this year. Clothing inventories were indeed very low, but I don't see the sales as pulling inventories down sharply at most chains. Unless this breaks soon, one would expect more store closures.

In fairness, here is the National Retail Federation's Holiday page. Their Dec 16th survey cracked me up. It begins by darkly noting that shoppers are procrastinating, and includes an analysis of credit buying:
“As expected, shoppers have shown tremendous restraint in buying gifts with the money they already have, not the money they hope to have,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “Relying less on credit for holiday purchases will help consumers feel more comfortable about their personal finances again and may make them more willing to spend in the future.”
I don't suppose 20+ credit card interest rates have anything to do with it? There are many older people who are not likely to have additional money in the future and have effectively had their credit cut off, so I wouldn't be holding my breath. It's time to figure out how to make a profit in this environment.

Consumers have been cutting revolving credit since Q3 08 - that's a year and a half now (see G.19). A lot of what they're doing is simply defaulting; perhaps retailers' hopes would be best pinned on a whole lot of consumer bankruptcies.

I plan to post later on why I don't think credit card debt IS coming back. I don't think most consumers will ever again be able to use these cards as a funding method (rather than a payment method) under current legislation. This year's credit card legislation did some needed things, but it also was completely mistaken in forbidding rate raises absent default. There is no possible way that creditors (including stores) can carry portfolios of any cards other than high-rate or gold-quality. I can't see how stores could get away with carrying gold quality either under the new rules.

Thursday, December 24, 2009

Merry Christmas

And Happy Holidays. A joyous New Year. I hope you are spending this time with someone you love. I am.

In case Santa's workshop was running late this year, it appears that WalMart is trying for a Black Monday.

Tuesday, December 22, 2009

Corporate Profits And GDP

To be honest with y'all, I still have Q3 GDP about where I originally had it - at about 2.4%. However BEA now has it at 2.2% annualized. Oookay. Whatever. We never really know what GDP is within half a percentage point annualized anyway.

Looking at the final release for Q3 GDP (which will be revised for years to come), several things seem notable.
  1. The inventory build was just beginning; Q4 should be in the 3s. After that, it's up in the air.
  2. Without CARS, we would have been in trouble.
  3. Income is the main problem for both businesses and consumers.
  4. The US is still in better shape than way too many of its trading partners, which worries me on exports.
  5. I am slightly more positive on Q1 2010 than before (based on inventories). I am guessing it may come in marginally positive.
  6. This really does appear to be a mid-recession growth cycle; there seems little chance that Q4 will get us back to even on GDP.
  7. Oil prices are way too high.
1) Change in private inventories (see Table 3 on page 8) was still negative. This means that inventory was still clearing in aggregate but that production to replace that inventory hadn't caught up. This gives us a headwind for Q4 and a near guaranty of about a percentage point more on annualized GDP.

2) See page 13, Table 12, which covers corporate profits. Nonfinancial corporate profits increased 18.2 billion from Q2. Motor vehicles accounted for a 21.9 billion increase. Ergo, without CARS we were (insert description of your choice - mine is "left dead in the water").

3) Ooooh, pain. See Table 1 on page 6 for real disposable personal income (-1.4%) and go back to Table 12 for corporate income. Financial income really doesn't matter a flip right now in terms of getting the economy moving; I can assure you that most banks are taking their profits to bolster their balance sheets at this point. So non-financial profits matter; these are the guys that are going to create jobs and move money through the economy. And non-financial profits aren't increasing much (mainly due to PPI rises and poor consumer incomes). Nonfinancial profits for 06 were 1079.9 billion; they reached their low in Q4 2008 at 736.6 billion, and since they have been struggling up from the abyss at about a 20 billion per quarter pace. In Q3 they were 792.2 billion. This is not the recipe for corporate expansion; most larger corporations are still looking to trim costs. In fact, they have now moved into the restructuring phase.

4) One theory has been that a weaker US dollar combined with decent growth overseas would prove a bonanza for many US corporations. So far this hasn't proved so. I usually do a quarterly survey of a bunch of corporations with significant overseas sales, and I can tell you that they are running into problems. This is not great news for Germany or Japan either. Here higher food and fuel costs are hurting the ability of consumers to spend across the world. Government-funded stimulus programs have overcome some of the gap in 2009, but how long can governments run deficits to provide bonuses to consumers if they buy stuff? And fuel subsidies are going to prove increasingly unwieldy. Exports helped in Q3 but appear likely to be less helpful in the months coming.

5) Q1 - Hopefully my judgement on this hasn't been skewed by pure disgust with the seemingly endless recession. I do not see in the freight and rail reports much information that would make me believe inventories have been replenished. Granted, sales are quite slow in many industries. Nonethe less, there ought to be at least a residual half a real percentage point left for Q1. Or maybe I'm just hoping. I have been chasing what seems to be a missing half a percentage point for three months now; it is either an illusion (it disappeared with the collapse of small businesses) or it will show up in Q1 2010. If it doesn't, I think final Q1 GDP for 2010 will be marginally negative.

6) Gross domestic product. The way I count it, the height of current dollar GDP occurred in Q3 08 at 14,546.7. Q3 09 is now 14,242.1 - 300 billion short. The most we can probably hope for in Q4 is 200 billion plus, which will still leave us short. Real GDP peaked in Q2 08 at 13,415.3 billion; in Q3 09 it came in at 12,973 billion - about 440 billion short. NBER may opt for the comparison to their official start (the end of 2007). Even so, Q4 07 was 13,391 billion. We have a long way to go to get back to "the way things were".

7) Oil prices are suppressing world growth as they suppress disposable incomes. Thus a carrying price of $70 is not viable; it is sustained on theory that demand will rise as the world emerges from a very severe recession, but at the current price it is subtracting from world growth. It's notable that heating oil consumption in Germany (with a lower overall unemployment rate than most developed countries) has been suppressed by current prices. The subject came up in the Bundesbank monthly report. In the US, oil inventories are all above their average ranges for this time of year except for propane (which is running very low). And US imports have dropped a stunning 11.3% compared to last year - when US oil consumption dropped heftily. US domestic oil consumption has also dropped about 4.6% compared to last year. I don't care what anyone says about production; at these prices there is a hefty oversupply of world oil - in 2008 the US consumed about 22% of world oil, so an import drop of over 10% should equate to 2% plus on the international market. Current oil prices are the product of speculation and too much liquidity. Because oil prices directly affect food prices, world hunger will increase next year and economies with younger demographics will have less disposable income. This will subtract from export growth in a number of economies.

As an addendum, November rail freight still was lagging significantly on a YoY basis. Carloads were down 8.2% and intermodal was down 6.7% from November 2008. From November 2007 carloads were down 17.4% and intermodal was down 14.2%. November's Monthly Treasury report gives the 2.9% Medicare tax receipts at 15,896 million for 09 versus 08's 16,420 million (-3.2%). Fiscal YTD (October/November) 31,487 08/ 30,465 09 (-3.2%). Backing it out, 15067 08 Oct; 14569 09 (-3.3%). I was disappointed, indeed crestfallen, over November's receipts because now we are getting into the period at which YoY comparisons ought to be much improved as we are now comparing against the full onslaught of the recession. So far in December matters haven't improved; corporate tax receipts are still lagging those of December 08, and WIET is still lagging as well (94,332 Dec 18th 08/ 90,967 09). Seasonal hiring has been better this year, and the Census jobs should be showing up. I am beginning to get worried. Hopefully by February/March we will get back to even. The economy was hemorraghing jobs through this period a year ago. Raises and job stabilization ought to be getting us to the point at which incomes aren't falling soon.

It is true that early retirements come into play, but it is a mark of economic weakness that these workers don't get replaced. Early retirements are lowering official unemployment figures, but certainly don't help the fiscal situation. Until corporate profits rebound, we aren't going to see much in the way of improving employment. Let's look at some history from St. Louis Fred:

You will notice that a period of leveling of corporate profits generally precedes US recessions, and then is followed by a sharp rise in unemployment during recession as companies attempt to retrieve their fortunes by whacking away at their costs. The carnage in US corporate profits in this last recession was unprecedented in the Post WWII era, and you will note that the relative rise in unemployment was as well. It is true that US corporate profits are rising, but they haven't gotten back to where they were, and if you were to adjust for the recovery in financial profits, you would have a graph with a much smaller rise.

I have stared blearily at all manner of administrative and congressional proposals about how to develop jobs; it seems to me that they are missing the obvious. If non-financial orporations can make money, they will hire. If not, they won't.

Imagine that you are a farmer, or a mid-range businessman, and you read the news of the EPA's declaration that carbon is a dangerous pollutant. That means you have major additional regulatory hoops pending; that alone would induce extreme caution in developing your business. And then there's the question of whether you will be taxed additionally on your employees' health insurance, or taxed if they can't get it. Then there's the carbon tax proposal, and all manner of state-induced energy and pollution-related insanity. We have been sawing away at our own legs for some time now; it should not be surprising that we have trouble walking.

Remove the uncertainty, cut tax rates, and let the real economy work. Going back to Table 12 in Q3 GDP, domestic industry profits increased 100.7 billion dollars in Q3. Of that, 81.7 billion dollars came from financials (including the Fed) and only 18.9 billion came from non-financial industries. That's where the jobs are - in non-financial domestic industries. You cannot expect companies to expand in the US to sell to other nations if they are taxed and regulated to death here.

To turn this ugly little bug of a mid-recession growth cycle into a self-sustaining recovery, we need jobs, which will fuel retail sales, which will fuel job growth. We've got to climb back up the hillside we tumbled down. Here are real retail sales v unemployment rates, yea verily, it is like unto the previous graph because the US has a consumer-dominated economy:

We've got one real asset going for us. By this stage in the recession, a whole lot of people with money to spend need hats, gloves, underwear and the like, and this will bring them into stores. But we also have continuing job uncertainty in many corporations, which is preventing any sort of irrational consumer exuberance. We need the new jobs to kind of start climbing up that ladder, and to get new jobs we need to adopt a business-friendly policy.

Sunday, December 20, 2009

Pant Pant

I hear the hospitals around Phoenix are pretty good. Also there are some good areas in Texas....

There has to be a better way....

But maybe I should be paying attention to the states that are getting "special" treatment under the Senate health care bill. Betsy Newmark has a great roundup; this is some pretty sickening stuff:
What amazes me is how this bill was crafted to treat some states, in perpetuity, differently from other states simply because those states had senators who were more powerful or more canny when it came to bargaining for their support.
Why should Michigan and Nebraska be the only states where their insurers get a tax exemption? Is there any rhyme or logic to that? And why should Medicare Advantage recipients in Pennsylvania, New York, and Florida be the only ones that don't face cuts? Why should taxes and benefits and regulations be different across the country?
The bit about non-profit insurers being treated differently in some states than others is particularly irksome. Of course Nelson's Nebraska won't have to pay for Medicare....

It strikes me that something is seriously wrong with Congress.

Also, see NOFP's post on the Peterson-Pew Commission for Budget Reform report. In 36 pages this report lays out the fiscal situation, which is serious. We have about ten years, and we need to take action during those ten years. The report contains a relatively detailed proposal:
The website is available here. The people involved in this are past financial heavyweights from Congress (GAO, CBO, OMB) and the Fed (like Volcker). The two main sponsors are leftish (Pew) and rightish (Peterson Foundation). You will find organizations from all shades of the political spectrum footnoted; serious persons from all perspectives realize that our debt is threatening all our goals. The conclusion:
Other countries have successfully undertaken fiscal consolidation efforts to reduce their debt. However in many cases, it took a debt crisis or severe international pressure for these nations to act. If policymakers fail to act before a crisis hits, citizens will pay a tremendous economic price.

The Peterson-Pew Commission on Budget Reform believes that policymakers must change the fiscal course to head off such a crisis. This will require policymakers to adopt a path toward sustainable debt and credibly commit to enacting it over the next several years. There is no question that the Commission’s plan will require hard choices—significant spending cuts and tax increases will be necessary to shift our fiscal course. And we are under no illusions that any single fiscal framework will fix the country’s fiscal problems
The "tremendous economic price" they discuss can be found in any study of Argentina or Turkey after finanical crisis; the middle class will be wiped out. Seriously. I admit that the economy is pretty bad now, but the truth is that the US recovery has moved along faster than in most other major countries. So it is time to get a grip on reality. This report discusses some enforcement mechanisms that sound good to me and might really put the spurs to Congress. See what you think.

Update: See this site for some updated info on the Senate health care bill.

Saturday, December 19, 2009

So There Is A Major Blizzard In The NE

Philly Metro is predicted to get 12-20 inches now? DC 12 to 20 inches. Greenwich, CT is still only looking at an effete 8-14 inches, with NYC expecting a feeble 5-10 inches. Boston, MA 7-15 inches.

Boston, GA 0 inches, fishing, hunting and golfing conditions not bad with mixed sun and clouds, high about 59. See? There's a reason to go south for the winter; those agonizing decisions about whether to fish, golf or hunt make winter sports much more attractive.

Somewhere, Gaia is snickering. It is pretty hard to generate a news cycle on Copenhagen when everyone's huddled inside drinking hot chocolate.... The weather people are very excited.

This leads me to reflect that the reason the hospitals are so good in the North is really the weather; these people have adversity to contend with. Hopefully I will not have to get the Chief to one in a hurry.

Oh, for the sunny South. Three or four inches would have been nice and seasonal. I don't want to see ten, and anything over that is pure M_O_M harassment IMO. The last few days the Chief has not been doing well although he took a turn for the better yesterday evening. But I have had very little sleep.

Thursday, December 17, 2009

Even The Democrats Are Skeptical

There is a moment in every presidency, good or bad, in which the current president sticks his foot in his mouth. Obama appears to have just had one on the "pass the medical reform bill or we will be bankrupted by Medicare" gaffe. Judging by DU, that is. The GOP was laughing, but the Democratic base is also incredulous.

I have to admit my mouth dropped open, because none of these bills do anything but accelerate our budget problems. I'll get back to blogging more as the Chief's situation improves and my Christmas crisis is redressed, but here are some numbers:

Click on this table and open it in another window or tab.

The numbers in the table are derived from the September Monthly Treasury Statement which sums fiscal year 2009, available here.

There were several problems in 2009. We had extraordinary revenue shortfalls due to a severe recession, we had extraordinary revenue outlays due to a severe recession and the bailouts, and we are experiencing the first wave of retirement expenses. The first two problems might be expected to resolve themselves. The third has just begun to make itself felt. Note the relatively smaller increase in Medicare - a lot of the rise in Social Security outlays occurred from early retirements. In 2011 the Medicare bill will start shooting up.

By breaking out the outlays above, I hoped to give everyone a clue of our problem. Current federal medical, social security and military expenses alone consumed more than 100% of federal revenues in 2009. We got a break on interest rates on the national debt, but that will be short-lived. Adding expenses for the federal debt takes us to 118% of all revenue.

Obviously we can't afford to expand federal entitlement programs. All of the medical reform bills do. Something's got to give!

Nor can anyone expect a big rise in federal revenue next year. Initial unemployment claims show that. The last three weeks are 454,000 > 473,000 > 480,000. This time of year the seasonal adjustments are noisy, but these are still remarkably high numbers six months into a recovery. They are better than last years', though!

But the revenue is not there yet. Comparing daily treasury receipts for Dec 15th 2008 to 2009, a sad M_O_M notes that we still are lagging on WIET (74,888 to 67,080) and CIT (48,170 to 42,254). Further, PPI has recently been rising quite quickly, and the ability for businesses to pass costs to consumers is not there. This is restraining production, and predictions now are for substantial food price rises next year.

In short, we are in for another, less intense, round of the same old same old a la the end of 2008. Martin Feldstein. Corporations do not hire when they are not making money, and everything I know shows that larger corporations are still slowly cutting. The problem with the rise in food prices is that countries with stronger demographics almost all spend much higher proportions of consumer incomes on food than the developed countries; this implies that the Asian/South American carrying wave will be much lower than many economists are predicting.

Returning to the US situation, in the next ten years (by 2020) the US Census figures that the core working population will rise only 5.4%, whereas the retired segment will rise 36.2%.

The inescapable reality is that Social Security and Medicare will rise far faster than employment taxes. These are pay as you go programs - every dollar not covered by employment taxes is a dollar that must be borrowed by Treasury THAT year.

Therefore neither anything the Democrats are suggesting will help, nor is the GOP currently addressing the underlying problem.

We are going to raise taxes. We cannot raise corporate taxes, therefore we are going to raise taxes on individuals. (The reason we cannot raise corporate taxes or capital gains taxes is that doing so will cut investment and jobs - we need those jobs to employ the working age population.)

Because individual incomes are rather limited, we should address current tax-exempt revenue (not capital gains) streams such as bonds and retirement funds. It should be obvious that wealthier retirees will have to pay more relatively; we cannot expect a much smaller relative working population to cover the costs for a much higher relative retired population. In 2010 the retirees are 21.6% of the working age population. In 2020 the retirees are 28% of the working age population.

IMO the GOP will regain some power, but does not currently have the confidence of the general population sufficient to broker a new broad compromise. Either the Democrats will develop into that party (after the current leadership fails utterly and falls in an internal insurrection) or a new party will emerge.

We can greatly ease the demographic transition by following high growth policies that will generate more jobs, but that is not sufficient to cover these costs.

We also cannot cut Medicare costs. The proposals to do so are a farce. We could alter some reimbursement schemes for less-essential medical services, such as changing from a 80/20 reimbursement to a 70/30 reimbursement on some operations (cataracts, hip replacements, etc) judged to be less essential. But that is about all we can do. We will certainly have to raise the current Medicare tax about a percent, and we will have to raise Medicare insurance premiums substantially for wealthier retirees.

The Blue Dog Democrats are currently the only political segment really engaged with reality, although the rural GOP contingent has the same orientation. It will be very interesting to see the outcome of the 2010 elections. I think the Reid/Pelosi/Obama triad has killed off Democratic progressivism for a generation.

We live in interesting times!

Friday, December 11, 2009

Retail Plus

I am still sitting on a very irascible male. But things are better, so....

November retail sales release:
Click on this to make it legible.

While things are truly improving YoY, it is largely because we are getting further into the decline. Real retail sales are improving, but not by much, because more spending is shifting to the "necessity" categories. See the last line aggregating groceries, drugs(app) and gasoline.

An 0.1% change is very significant for classes of retailers; remember, this report is in millions of dollars. So this November, American consumers spent 312 million less on electronics than last November. Also, note that gasoline sucked up 2.7 billion more than last November. That is what is hurting us and damping the recovery.

However look at autos - people have ratcheted back spending long enough that the need for new autos is growing, and spending is increasing even though many people are out of work.

Here from the St. Louis Fed's Fred data are REAL retail (inflation adjusted) sales:

This only goes through October, however, just from glancing through the figures in the November table above one can tell that November's real sales aren't going to be that much of an improvement. Gasoline, for example, cost considerably more this November:

The cost of food has fallen YoY, but the cost of gasoline and drugs has risen YoY. See October CPI (the most recent). The swing in gasoline costs alone will have a thumping big effect on November's CPI. Consumer retail sales in the first quarter of 2009 got a big boost from the drop in gasoline prices; since that wore off we've been mostly bouncing along the bottom.

Adusting for inflation and population, per capita retail sales appears to be still drifting down. I guess we'd better be worried about jobs and incomes! For the most part, even consumers with jobs appear to be compensating for price increases in one set of commodities by shifting their consumption patterns and flat out cutting spending for other commodities.

Hopefully this situation will be stabilizing soon, but services have taken a hard hit over the last two quarters:

Accounting and legal did much better in the third quarter. I assume a decent portion of that stems from bankruptcies.

PS: See Shrinkwrapped's post on federal salaries for an inkling of just how far we are from getting the federal bureacracy in line with the private sector. Hot Air. SW writes:
When the bureaucracy is small and primarily involved with facilitating the functioning of a system, it can actually add value. However, as the bureaucracy grows, it inevitably (and often rather quickly) reaches the point where its own perpetuation and the enhancement of its power and resource utilization become primary motivators. We have long since reached that point. It seems that now our government is determined to move from the merely ridiculous to the completely absurd.
We are heading straight toward a brick wall; the entire government sector is supported by the private sector. All the promises and the fine rhetoric ignore the fact that the country simply cannot support its current government structure.

Finally (for this post), December's NFIB small business survey is enough to make a strong economist cry. In all too many cases, survey components are revisiting survey lows (most of which occurred in 2009). The first page starts out at a depressing -9 points, and from there the detail gets even more grim. I cannot force myself to write about the gory details, but I would recommend that anyone who has an optimistic outlook for the first half of 2010 should read this and absorb it. I have high respect for this survey.

I will quote from the commentary:
Owner optimism remains stuck at recession levels. The proximate cause is very weak consumer spending, better than a year ago, but that was pretty bad. Fifteen (15) percent reported gains, while 43 percent reported
weakness. With weak consumer spending, there is little need to invest in inventory (and borrow money to support inventory investment). Inventory investment plans are at historically very low levels. Similarly capital
spending is on hold, with actual outlays and planned outlays at record low levels along with the demand for loans to finance the outlays. More firms still plan on reducing employment than plan on adding to their payrolls.
But the other major concern is the level of uncertainty being created by government, the usually source of uncertainty for the economy. The “turbulence” created when Congress is in session is often debilitating, this
year being one of the worst. Themes including “tax more,” “tax the rich even more,” “VAT taxes,” higher energy costs due to Cap and Trade, mandates and taxes for health care, threats of “stimulus II,” incomprehensible deficits, and a huge pool of liquidity created by the Federal Reserve Bank that threatens price stability and higher interest rates. The list goes on and on. There is not much to look forward to here and good reason to “keep your powder dry.” Uncertainly is the enemy of the real economy as well as financial markets.

And here is a graph to show the predictive value of this survey - note that small business downturns are strongly predictive of the rest of the economy:
Click on it to make it larger.

Consumers don't have income, so small business owners don't, and that is why they are still cutting employment, wages, inventory and capital expenditure plans.

If you read this survey look at the actual price changes on the graph on page 11, and you'll see why compensation is being cut. There is less and less money circulating on the ground; we are in severe trouble.

Wednesday, December 09, 2009


Chief is still alive, and doing well enough so I have had a bit of a chance to catch up with the economic news. No firm Chief answers yet, other than he's slowly starving which is putting a lot of stress on his heart, but a bunch of nasties have been ruled out, which puts me in a very good mood. This morning at yet another radiology clinic I was humming along with the Christmas songs.

Personally, I think he is slowly starving himself as a defense against nagging, and that the ultimate answer will be that it is all my fault. In his view, that is. We fought all day yesterday about him not eating. Today he repented after we got back from the AM testing round, and fixed himself an egg, two pieces of bread and two pieces of swiss cheese. I think he's just pissed off at me, so I did not say anything about moderation. In fact, I did not say anything about anything. He lost about 5 pounds last week. Yes, 5 pounds in one week. He has a high metabolism.

On the economic side:
Massive downward revision to Japanese GDP for Q3. Real revised down from 4.8% to 1.3%, and nominal revised down from -0.1% to -0.9%. These are annualized numbers, but that nominal decline truly smarts. I haven't had time to go through it yet, but the reporting is that company spending collapsed. Price declines continue apace.

German industrial production for October dropped. This probably isn't that huge a deal, except as it reflects on company spending.

US crude stocks continue high, high, high, except for propane which is way down. Refinery capacity utilization is back up to 81.1%, which is a considerable boost from the below 80s we were at for a while. Imports YTD are down 11.1%, but total product supplied is only down 4.8%. The difference is in domestic production, which is up 7.1%.

On the knotty question of November employment. First, we are out of the collapsing phase, but we are still in the trickle-down phase. There was poor workforce participation (not in labor force rose 291,000), but SA workers (Table A) rose 227,000. Thus it is mixed. Going to Table A, we find that wage and salary workers dropped 164,000, but there was a huge increase in self-employed workers (8,929 > 9,070). Maybe this represented some strength in the economy, maybe not. If you work 1 hour in the week you are counted as "self-employed".

Looking at withheld income and employment taxes from Treasury, it appeared that November was somewhat disappointing on the jobs front. Because of calendar differences, it was somewhat hard to compare month to month for November. However Daily Treasury totals for the fiscal year (begins in October) through Dec 1st:
WIET: 291,980
CIT: 13,981
FUT: 742

WIET: 263,501 (-9.8%)
CIT: 11,286 (-19.3%)
FUT: 616 (-16.9%)
CIT is corporate income tax. I was truly disappointed by the continued decline. WIET (basically withheld Social Security, Medicare and Income Taxes) improved considerably on a YoY basis from the end of October, but not as much as I had hoped. We'll see over the next few months. In theory, if the economy is just not losing very many jobs WIET receipts should shift to a positive trend YoY very soon. The reason is that if total jobs aren't dropping, raises should kick in and raise total wages.

I think we must be realistic about corporate incomes, however. Until they stabilize and start to grow, we cannot expect job creation to resume. We can gain on the unemployment numbers from older workers giving up and going to Social Security early, but that is not going to boost tax receipts. Also, if they go on early retirement their monthly benefits are cut.

The problem with the US economy is that there is less money out there for the consumers. Yes, some people are doing well, but far too many people are doing worse.

Most notable in Table A was that wage and salary workers in the private sector dropped 298,000 on a seasonally adjusted basis in November. That did not look encouraging! Government wage and salary workers rose 71,000. Interesting - might be Census?

To give you a better picture, here are some graphs from BLS:

This is non-ag private wage and salary workers on an NSA basis. Ignoring last year (when we were in the collapse), you see that normally this number rises in November - November is normally the peak for employment in growing years. There is a tiny uptick here from October, but the annual trajectory shows how deep the slump has been.

This is non ag government workers on an NSA basis. You'll note that this year's rise is somewhat unusual, but look back to 1999. That's why I think the November report involves Census jobs.

For comparison, this is total non-ag wage and salary jobs, including both government and private, again on an NSA basis. It looks very different from the first graph, doesn't it?

I do not think we are through the adaptation and recovery phase of this recession. This time tax revenues are not going to come back. We will have to cut government expenditures on the local, state and federal level to compensate for lower wages and higher retirement benefits. There is a major adjustment coming there.

We will also have to raise taxes.

Add to that picture the undeniable fact that it looks like gross private domestic investment is doomed to drop next year, and I cannot be very optimistic. I think we are getting to catch our breath, but that we will be forced to confront a structural readjustment before reaching another economic growth phase. If we don't do it, we are going to be looking at a declining nominal GDP like Japan's, and that would be a situation from which it would be extremely difficult to recover. I am wondering just how Japan is going to escape their situation.

Sunday, December 06, 2009

GOT IT!!!!!

What seems to be driving his blood pressure and heart rate are blood glucose levels which are occasionally swinging wildly although inconsistently.

He doesn't have clear Type II, because I fed him a spaghetti dinner last night and made him go lie down, and two hours later his blood sugar was 96. All through the night his glucose readings were steady and his BP and heart rate calmed down into very normal ranges. But earlier in the day (mid-afternoon) his BS was 157, and dropped to 78 two hours later without eating - and BP and heart rate were way up. Naturally enough, because with blood sugar that high his body was starved for energy.

Late this morning his blood sugar was 168, and his heart rate was up and his BP had taken that sudden jump to 136/77 that presaged disaster earlier. But now at 1:10 his blood sugar is 91 and his BP is 115/65, pulse 56.

So now it's check liver/gall bladder/pancreas. With any luck it is inflammation/partial blockage of that common duct and antibiotics will clear it, although if his gall bladder is really bad he may need to have it out. The other possibilities are liver problems, etc but I doubt it. The occasional sharp pangs the Chief was feeling may well have been clearing of the blockage, so by the time he got to the hospital the high blood sugar had cleared.

I have had very little sleep for the last two days, but I am profoundly relieved. He is moving around a lot more, because I think it might help clear things.

It's probably going to be all right, although until this is resolved this guy has to be watched very carefully. My dear, dear Chief.

In defense of all the doctors who have seen this guy, it is pure hell to catch an intermittent like this in electronics, and probably five times harder to catch it in medicine. You could run test after test on the Chief and not catch the glucose problem, because most of the time it is normal and when it goes really high, it tends to clear itself after a couple of hours. But by then the Chief's system is effed up, and it takes hours more for things to settle down. In fact the Chief's blood sugar readings have been generally normal during the hospital visits. The only way to really figure this out was to take days of readings like this to catch those sudden spikes.

One time we had an extended series of system crashes at a bank. We were back and forth, back and forth, and the bank was getting furious with us. The owner of the firm went out there, checked every thing out backwards and forwards, and sent a tech to sit out there with a voltmeter for days. And on the second day, there it was. Major voltage fluctuations. The solution was power conditioning on the line coming into the building. After that, they never again had any problems.

And lest any of you think I am some sort of really smart person, what caused me to check this was that the Light popped in quite suddenly when we were sitting in SuperDoc's office on Saturday. I found myself saying to SuperDoc without any conscious intention or any thought at all that I would check the Chief's blood sugar readings over the weekend. SuperDoc looked surprised but said that it couldn't hurt, although he would expect them to be a bit off because of all the meds the Chief had been on. I really think the prayers helped; my mind has been blank from sheer terror through a lot of this. I have not been thinking well at all.

Thank you all for the information and support. It has really helped.

Saturday, December 05, 2009

Chief Is Okay For No Reason

Technically, this is all unexplained. But the Chief is fine. I got him out of the hospital last night. His resting blood pressure had never come down but was at least hanging in the 150-160/80 levels, and his pulse had slowed.

The hospital tried to sneak in the Imdur, but luckily I was there when they tried (they didn't even tell him what they were giving him). I said no, thereby mightily pissing off a really superb cardio nurse. SuperDoc and I were calling back and forth all day - I'd get the Chief's readings and retail them over the phone.

By the afternoon, based on the Chief's response to nitro, SuperDoc had told me that Imdur could well kill the Chief. SuperDoc's exact words were "You'll get him home and he'll go out right before your eyes."

Anyway, SuperDoc called in a prescription for a vasodilator that he thought would be a heck of a lot safer, although he didn't want me to use even that unless I absolutely had to.

So here's the SuperDociness of it all: I did not give the Chief any meds last night at all, based on my guidelines from SuperDoc even though the Chief's low reading was hanging in the 80s and the high didn't want to go down from the low 150s. By 5:30 AM the Chief's BP was 93/53, pulse 66. SuperDoc wins again. The highest so far today is 128/68. At SuperDoc's office it was 120/70.

All the heart tests have come back fine. The echocardiogram yesterday was great. The highest occlusion he's got is 40% (this keeps dropping). The hospital cardiologist had not even reviewed the Chief's records when ordering the Imdur, but did after I refused the Imdur on SuperDoc's orders. Cardiologist's final conclusion was that the pain has nothing to do with his heart. That's fine, but the Chief's sudden escalations of blood pressure and pulse are due to some sort of stress. He shows no fever still.

So SuperDoc told me just to sit on the Chief, and call him any time all weekend if something whacks out again. On Tuesday SuperDoc had told me that the next step was to check gall bladder and esophagus, but he didn't want to do esophagus until the Chief is stable.

The Chief normally does not have high blood pressure. However the pain is associated with these fits of high blood pressure. That much I have confirmed. Whether this is angina or whether the blood pressure is causative or a side effect of a cause is in question. Because the Chief is eating so carefully he may not have noticed other symptoms of gall bladder disease. In severe cases, the duct can become so blocked that the gall bladder becomes infected. If there is a sudden release of infected matter into the intestines, some interesting misery can result as the intestinal tract spasms, and of course a gall stone that's traveling through the duct is going may cause havoc.

So if the Chief stays stable over the weekend SuperDoc will refer him for gall bladder testing although he says he cannot let him be sedated right now for an intubation.

In any case, thanks for the kind wishes, tips and prayers. The Chief is very happy to be home; the bulldog is even happier than the Chief. She rode shotgun with us to the doctor's office this morning.

Right now the Chief is on Plavix, Toprol (metoprolol) and lovastatin.

The Chief's chest pain did not remit in the hospital this time even with nitro.

Anyway, for the Anon commenter and those who are wondering about my concern with blood pressure: The Chief does not have sustained high blood pressure. As far as we can tell, his blood pressure is both rising and dropping abnormally for him. Also the Chief's blood pressure has normally been in regular ranges. The cardiologist at the specialty hospital decided this was angina, but it may not be.

Sudden drops in blood pressure can be a symptom of staph infections in the gall bladder or of the biliary duct, which connects the liver, gall bladder and pancreas to the intestine. A gall stone can travel through and block the duct below the pancreas, causing transient pancreatitis. If the gall bladder is infected (especially with staph), you can have a nasty situation develop:

Although the last blood test (Monday) did not show an elevated WBC, the later (not the initial) test in the hospital in SGA did. It is possible that the Chief is experiencing intermittent gall bladder attacks and has a mild infection in there somewhere that is sometimes draining. The Chief has a bang-up immune system which normally does a great job of suppressing infections; he may have a walled off infection.

I am also supposed to check the Chief's blood sugar this weekend just in case anything odd is happening there. So far nothing odd has shown up on the tests, but if his blood sugar is fluctuating oddly it might be time to head down to that duct. Even transient inflammation of the common duct could cause spasms.

Since this appears to have been going on for just about two months, sitting and waiting for it to pass is no longer an option.

PS: Chief's last BP at 12:30 was 108/53, so you can see why I am sending up prayers of gratitude for SuperDoc's deferred retirement. An extended release vasodilator is not what the Chief needs.

Thursday, December 03, 2009

This Time I Left Him In The Hospital

There is no doubt that if this continues the Chief will have a heart attack, although he hasn't had one yet. This is getting worse very rapidly, and today I could not get his blood pressure down at all. Plus his heart was pounding and his heart rate was going up and down very erratically; I felt some missed beats. Eventually I drove him to the hospital. After waiting with him for a few hours and confirming they would admit him I finally drove home around midnight.

The thing that killed me is that on Monday aspirin dropped his BP (which was much lower), and the chest pain appeared to have started on Sunday after he walked the dog up a hill. But today it started while he was resting, and the same dose of aspirin didn't slow the rise at all. I finally gave him the lisinopril, and that dropped his blood pressure for a while (although it also caused him to break out in red spots), but then his BP turned and started climbing again, so at 8:00 PM I pulled the plug and drove him in to a more local hospital. The high I measured at home was 194/98, and that was after a full aspirin and and hours of bed rest. His blood pressure on resting is normally in the 12~/7~ range. On arrival at the hospital his BP for the first 30 minutes averaged 178/92.

They were a bit snotty at the hospital, but I was firm. He had been having chest pain since the late morning; the dull ache and intensified and by 5:30 PM he was having occasional "electric shocks". The situation was escalating and escalating, and I have to sleep some time.

I have confirmed that the chest pains are associated with high blood pressure, but the problem is that every four days or so his condition worsens noticeably. Telling the guy to take nitro is fine, but he can't keep taking nitro all day. I also cannot continue giving him these high doses of aspirin, not that it is working any more.

The Imdur controversy has not been settled either; SuperDoc won't let him take it unless he is in the hospital for a few days for observation and the SuperHospitalDoc won't admit him. I will try again tomorrow at this hospital. SuperDoc was going to try something else tomorrow (Friday, now today), so I will probably drive over to SuperDoc's office at 7:30 AM to see if he wants to try the Chief on the Imdur now that that he's in the hospital. Or if not, what he recommends. Something funky is going on; I have a feeling this will end in a fatal arrythmia. The Chief does have an AV block. The other day he was experiencing dizziness; tonight he was short of breath and extremely tired even when lying down. These have got to be very serious warning signs.

The worst of it is that the Chief is very stoic, and they are treating him like a hysteric. He didn't even tell me about the pain this morning; fortunately the bulldog started following him around looking frantic, so I knew to harass the Chief with extra blood pressure readings. This is the guy who chopped up his finger on the lawnmower blade and refused to go to the doctor. Instead he did minor surgery on himself. It healed quite well, although we had a fight that lasted for days until he finally agreed to go get a tetanus shot.

See, writing this post has helped, because this was sudden onset after he had been struggling with the flu. I think they need to do a scan of the heart itself and see if anything looks funky; maybe he has an internal infection causing swelling and sometimes intensifying the block. Whatever it is, it is clearly progressive. Also, when he gets in these states the heart is shifting activity quite erratically almost as if it is struggling to compensate for something and reach a new balance.

Wednesday, December 02, 2009

Sorry For Absence

This is my hell. Diagnosis unstable angina, SuperDoc told me to be very worried. The Chief was at the hospital all day into late evening (we got home around 11). New angiogram. No blockage, but low blood flow to the lower heart.

The hospital prescribed Imdur; SuperDoc told me that because of the Chief's prior history he should be in the hospital for a couple of days upon starting that drug, although it was probably the right thing. Chief screamed for approximately 11 hours upon receiving that news, so I haven't called the hospital doc back to ask for hospitalization.

SuperDoc also told me to take him off the lisinopril which was prescribed in the GA hospital. This morning I went and bought a heart pressure monitor and we'll see how the Chief does off it. The chest pain has not recurred. The Chief had a bad reaction to Altace which is very similar to lisinopril (he was hospitalized with sudden anaphylactic reactions to substances to which he is normally not allergic) and the chest pain was sudden onset in October and never cleared since then, except the Chief says it is gone now. So there is some chance he was reacting badly to the lisinopril. Again, we'll see.

The Chief is resting because you need to go light activity for three days after the angiogram, so the next couple of days will tell the tale as he begins to resume activity, although I think I will keep the Chief off the woodpile for some time to come. Prayers would be appreciated.

I stopped the Chief screaming with the blood pressure monitor and a prescription to control those readings. He can drop his own blood pressure to some extent, so at least he has a goal and has stopped yelling at me. His mood has improved a lot upon finding he can affect the situation positively, so that's something.

The Chief is now being treated at a specialty hospital that is one of the best in the country, so at least I know he won't be killed through incompetence. SuperDoc told me not to let the Chief go back to South GA; he said the situation is too serious. Both the hospital and SuperDoc seemed quite astounded at the care the Chief received (or did not receive) in SGA. The words "a severely technically limited study" occurred in the hospital writeup referring to the SGA diagnostics. SuperDoc was muttering bitterly about jail terms.

The hospital the Chief went to in SGA is a regional medical center.

I bring this up because everyone's focusing on insurance, not medical care. Low Medicaid and Medicare reimbursements are not only driving up the cost of private insurance but crippling medical services in the more rural areas. Obviously this can drive up expenses in the long term - the right medical care is cheapest in the long run.

Uh, I hate to belabor the point, but this is a case in which prayer might be effective. The Chief has done absolutely everything he can do - at the hospital in SGA in October, even with the extremely low dose of cholesterol medicine, the Chief's total cholesterol was 147 and his triglycerides were a sterling 77. In general, you can get help if you are doing your share but not if you are sitting on your butt expecting the Lord to push one way while you are pushing the other way. You have to make the decision; once you do you sometimes can get help for the stuff you can't do yourself.

Anyway, throughout my long association with SuperDoc, this is the only time I have ever been told to panic, so I am pretty worried. I have resolved to enjoy every day and every hour of my time with the Chief.

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