economics posts
FeedPosted Mar 23rd 2010 1:30PM by Mark Fightmaster (RSS feed)
Filed under: Economic Data, Financial Crisis
In what could be determined as the understatement of the day, Federal Reserve Bank of Philadelphia President Charles Plosser told a group assembled at a banking forum in Prague that monetary policymakers must be vigilant to ensure rules-based policy decisions aren't skewed by poor data.
Plosser listed problems that are associated with measuring output gaps. An output gap is defined as the difference between the actual output of an economy and the output it could achieve at its most efficient. An output gap can be positive or negative (positive means actual output is more than full-capacity output and vice versa for negative). Plosser believes that output gaps and/or unemployment gaps could appear bigger than they are, which could lead to incorrect decisions as it comes to inflation. Plosser believes that "Explaining such decisions about the appropriate stance of monetary policy will be challenging, and central bankers will need to communicate with the public about these issues well in advance of their decisions to ensure that their policy actions are not misunderstood."
Continue reading Fed's Plosser Says That Poor Data Can Skew Policy
Posted Oct 31st 2009 11:40AM by Tom Johansmeyer (RSS feed)
Filed under: Kellogg Co (K), Colgate-Palmolive (CL), Procter and Gamble (PG), Economic Data
Consumer spending had its largest fall this year, thanks to the end of the "Cash for Clunkers" program. And, incomes were flat. No change to the money coming in and a drop in the cash going out translates to an impediment to economic recovery.
In September, consumer spending fell 0.5%, the first decline in five months and the worst in nine. Wages and salaries dropped 0.2%, effectively offsetting the 0.2% up-tick in August. The economy did grow in the third quarter of 2009, hinting that the worst recession in 70 years may be coming to a close, but the tough September suggests we still have some work in front of us.
Continue reading Bad September, good Q3 for consumer spending, what's next?
Posted Oct 22nd 2009 3:40PM by Tom Johansmeyer (RSS feed)
Filed under: China, Boeing Co (BA)
True entrepreneurs will go to any length to get their companies off the ground. And, they're known for accepting the consequences of the risks they take. Some businesses never make it to launch, never bring in a dime, never lead to that killer IPO. In even rarer cases, these adventures can put two people behind the defendants' table on charges of corporate espionage. Lan Lee, an American, and Yuefei Ge, a Chinese citizen, allegedly swiped computer chip blueprints and tried to gain Chinese government support for a startup using these illicit goods. Now, they could face up to 65 years on charges of corporate espionage.
Continue reading Economic espionage comes to trial, first time with a jury
Posted Jul 10th 2009 5:20PM by Tom Johansmeyer (RSS feed)
Filed under: Recession, Financial Crisis
There are two competing positions on consumer sentiment right now. One is that it turned south last week, as people worried about their jobs – always a bad sign for spending. The other is that consumer sentiment didn't crap out in July: it fizzled in May. So, it's not a question of whether consumers aren't confident in the U.S. economic machine, it's just a matter of when the collective mood changed.
The July camp is set up around the Reuters/University of Michigan Surveys of Consumers, which makes now the weakest point for consumer sentiment since March. Those who favor May look to domestic demand for foreign goods, which went soft two months ago, bringing the monthly trade deficit to its narrowest since 1999. The U.S. trade gap unexpectedly tightened to $26 billion in May, with exports up 1.6% and imports down 0.6%, according to the U.S. Department of Commerce.
Continue reading Consumer sentiment down, according to everyone
Posted Jun 15th 2009 6:47PM by Sheldon Liber (RSS feed)
Filed under: International Markets, Other Issues, Rants and Raves, Middle East, Scandals, Politics, Presidential Elections, Oil, Headline News

The landslide victory of current president
Mahmoud Ahmadinejad and the announcement of same, only hours after the voting polls closed, even though paper ballots had to be hand counted, has cast serious doubts about the election results.
Last week I wrote of
Iran's great potential but today much of that potential has evaporated for the time being, and perhaps for another four years. The rulers of Iran have decided that the devil they know is better than the one they don't. Unfortunately, as far as politicians go, they may have gotten exactly that.
Continue reading Iran will waste four more years
Posted Mar 17th 2009 9:00AM by Zac Bissonnette (RSS feed)
Filed under: Brazil

With "Buy American" policies in the stimulus package, one of the worst things to come out of the recession is a return to protectionist trade policies and a belief that "keeping the money over here" is the best thing for the United States economy.
Brazilian President Luiz Inacio Lula da Silva blasted protectionist trade policies in a speech to bankers and business leaders in what
Bloomberg is calling "his most high-profile defense to date of free trade, which he says is necessary to protect jobs in poor countries beset by the global crisis."
Continue reading Brazilian president warns of protectionist dangers
Posted Mar 13th 2009 2:50PM by Todd Harrison (RSS feed)
Filed under: Economic Data
This post was written by Minyanville contributor Bennet Sedacca.
My main reason for being long equities was purely a technical/sentiment call. But many of those that were asking me if they should liquidate their portfolios just 10 days ago were asking me what to buy and how long I thought the rally would last. I must confess that my honest to goodness answer is/was 'no idea.' But the change in sentiment was what quickly caught my attention.
Further, TV commentators and others turned bullish awfully quickly.
But the REAL reason is that MACRO TRUMPS TECHNICALS.
I just saw the latest Credit Market Debt/GDP number as of 12/31 (and this is before GDP was going to drop and before all of the recent issuance) and it was a stunning 370%. A record high by a long shot.
So much for de-leveraging. In fact the economy is getting MORE leveraged.
Posted Feb 6th 2009 9:42AM by Peter Cohan (RSS feed)
Filed under: Economic Data, Recession, Financial Crisis
The Congressional Oversight Panel (COP) reports today that Hank Paulson's Troubled Asset Recovery Plan (TARP) stole $78 billion of our money. This sounds like a huge under count to me -- I would put the figure at much closer to $350 billion. The questions now are what to do about TARP and whether similar waste can be prevented for the next $350 billion.
How did COP arrive at the $78 billion? It claims that TARP received bank assets worth $176 billion in exchange for capital purchases of $254 billion. Two hundred banks have gotten TARP money so far. In addition to assets, TARP has gotten preferred stock and warrants in exchange for its cash. And I would guess that the amount taxpayers have lost is well in excess of the $78 billion.
Continue reading TARP robs $78 billion in taxpayer cash
Posted Dec 28th 2008 9:10AM by Zac Bissonnette (RSS feed)
Filed under: Employees, Politics
President-elect Barack Obama campaigned -- and has continued to generate positive press -- on his commitment to job creation.
I've been scratching my head at this for awhile and wondering: Why is job creation a worthy goal? Shouldn't the goal be economic growth, and job creation is a happy byproduct of that?
Writing in Reason, Jacob Sullum, dissects exactly why Obama's rhetoric on job creation is nonsensical, illogical, and flies in the face of economics:
Obama also wants to spend $60 billion to "provide financing to transportation infrastructure projects across the nation." He says "these projects will create up to two million new direct and indirect jobs and stimulate approximately $35 billion per year in new economic activity. Fixing a bridge, widening a highway or building a light rail system may or may not make economic sense. But the fact that it involves paying people to operate jackhammers and pour concrete does not make it any more worthwhile. If creating jobs can justify transportation projects, why not fill the country with bridges to nowhere.
My optimistic hope is that Obama realizes that job creation is not a worthy goal and mentions only because he's politically savvy enough to know that it will generate consensus around his ambitious proposals. But if his billions of dollars in infrastructure projects are motivated by a desire to create jobs, we are in a lot of trouble.
Posted Nov 10th 2008 9:09AM by Peter Cohan (RSS feed)
Filed under: Amer Intl Group (AIG), Politics, Financial Crisis
Today, the President-elect is meeting at the White House with the current President. No President in U.S. history has left his successor with two long wars with no end and an economic depression. That is until the current one. But George W. Bush has more trouble in store for his successor. And he's piling on the problems in his usual secretive manner -- hoping nobody will notice.
How so? First, the Treasury Department this morning announced that it would increase the size of the bailout of American International Group (NYSE: AIG) from $143.7 billion to $150 billion and it would do so from funds in the $810 billion bank bailout bill. Second, he snuck a $140 billion bank tax break into that same bailout bill that would encourage bank mergers by allowing profitable banks to pay less tax by using the losses from unprofitable ones they buy to offset their taxable income.
Each of these moves is complex but the bottom line is that more of your money is going to bail out the mistakes of a handful of executives without any input from taxpayer representatives. The new AIG bailout swaps a program that gave it $143.7 billion of taxpayer money -- the original $85 billion loan for warrants to buy 79.9% stake; plus $37.8 billion more to cover losses from AIG's money-losing securities lending unit; plus another $20.9 billion worth of Commercial Paper -- for a new deal.
Continue reading Bush sneaks $146.3 billion in bank tax breaks and new AIG cash onto Obama's plate
Posted Sep 12th 2008 8:42AM by Douglas McIntyre (RSS feed)
Filed under: China, Economic Data, Recession
What might be considered a recession in the US is probably different from what a recession would look like in China. In the US, the economy has to have two quarters of negative GDP growth. In an economy like the one on the mainland, which has been growing at 10% a year, an economic calamity might begin if the move in GDP expansion slipped to 5%.
At a slower rate of growth, wage increases for China's middle class might stagnate. This group is the engine of the country's great improvements in consumer spending. Factory employment could drop if exports slowed due to a recession in Japan and the West.
Odd as it may seem, a GDP improvement that might be considered robust in the US could be a disaster for the Chinese.
According to Bloomberg, China's industrial output rose at the slowest rate in six years and much of that was due to a drop in export demand. The nation is now looking at tax cuts to improve growth prospects. That sounds a bit like the tax rebate program in the US.
The Chinese consumer fuels much of the import demand in the country. Many of those imported goods come from the US. It is a bit of a vicious cycle. China and America have become co-dependent
Douglas A. McIntyre is an editor at 247wallst.com.
Posted Sep 10th 2008 12:45PM by Jonathan Berr (RSS feed)
Filed under: Economic Data, Politics, Federal Reserve, Recession

Democratic presidential candidate Barack Obama, who has made the economy a focal point in his campaign, is
slipping in the polls as the popularity of opponent John McCain surged after his selection of the Alaska Gov. Sarah Palin as his running-mate.
Now Obama and his supporters are hoping that their support for a
second economic stimulus -- worth about $50 billion -- will grab the attention of voters fascinated by Palin, the moose-hunting hockey mom conservative firebrand. That's going to be a challenge.
Voters now are focused on Palin. They are gobbling up every detail about her life -- The Bridge to Nowhere (which she actually supported for a while), her baby with Down's Syndrome, her pregnant teenage daughter, whether she wanted to ban books from the local library. The list is endless. The McCain campaign is fueling interest in "Sarah Barracuda" by keeping her away from the media. This week, Palin is supposed to sit down with Charlie Gibson of
ABC News. More interviews will follow though apparently
not with Oprah Winfrey.
Democrats, including this one, are betting that once Palin is no longer the flavor of the week voters will move onto more pressing issues such as the economy (and, of course, "American Idol"). The economy is in terrible shape. The federal budget deficit is soaring and unemployment is at record levels. Former Treasury Secretary Larry Summers endorsed the second stimulus plan today in testimony before Congress.
Continue reading Will a second economic stimulus revive Obama's campaign?
Posted Sep 5th 2008 5:51PM by Jonathan Berr (RSS feed)
Filed under: General Electric (GE), , Recession, NASDAQ

The global stock market had more ups and downs this week than the career of Britney Spears. Don't look for the bottom to appear anytime soon following the worst week for global equities in
six years.A parade of superlatives continues to weigh on the mind of investors, most of them bad. Unemployment is at a five-year high. Payrolls shrank by 84,000 last month, according to the Labor Department. That's more than 75,000 economists predicted, the
Associated Press said. Rising interest rates spurred the biggest increase in the foreclosure rate in almost three decades, according to
Bloomberg News.
Sure oil prices are
dropping to near $105 but they are still high. No car, truck or airplane was ever designed with the thought that oil would be anywhere near that high. Gasoline prices have also come down but they are still at levels that many Americans can not afford.
Continue reading Stocks have their worst week in six years
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