Posts Tagged ‘economic stimulus’

Good News: The Great Recession is Over; Bad News: It Doesn’t Feel Like It

Good News: The Great Recession is Over; Bad News: It Doesn’t Feel Like It

Courtesy of Mish

According to the NBER, at long last the great recession is officially over. Bloomberg reports Worst U.S. Recession Since 1930s Ended in June 2009.

The longest and deepest U.S. recession since the Great Depression ended in June 2009, lasting 18 months, the National Bureau of Economic Research said.

“The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007,” the Cambridge, Massachusetts-based bureau’s business cycle dating group said today in a statement. “The basis for this decision was the length and strength of the recovery to date.” The committee is the accepted arbiter of when recessions start and end.

“The economy has begun to move forward, albeit at a slow, disappointing pace,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York. “It’s a recovery that feels fragile, and still raises questions about the risks to its sustainability.” The odds of the economy falling back into another recession are about 25 percent, Kasman said.

Over 50 and Never Working Again

The New York Times comments on the Fears of Never Working Again

Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.

According to a Gallup poll in April, more than a third of people not yet retired plan to work beyond age 65, compared with just 12 percent in 1995.

Older workers who lose their jobs could pose a policy problem if they lose their ability to be self-sufficient. “That’s what we should be worrying about,” said Carl E. Van Horn, professor of public policy and director of the John J. Heldrich Center for Workforce Development at Rutgers University, “what it means to this class of the new unemployables, people who have been cast adrift at a very vulnerable part of their career and their life.”

Older people who lose their jobs take longer to find work. In August, the average time unemployed for those 55 and older was slightly more than 39


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Record Low Mortgage Rates, A Record Low Federal Funds Rate And Obscene Economic Stimulus Spending Have All Failed – Will Nothing Stimulate This Dead Horse Of An Economy?

Record Low Mortgage Rates, A Record Low Federal Funds Rate And Obscene Economic Stimulus Spending Have All Failed – Will Nothing Stimulate This Dead Horse Of An Economy?

Courtesy of Michael Snyder at Economic Collapse 

Over the past several years, the Federal Reserve and the U.S. government have tried everything that they can think of to stimulate this dead horse of an economy but nothing has worked.  The Fed has slashed the federal funds rate to record low levels, mortgage rates have been pushed to all-time lows and the U.S. government has spent hundreds of billions of dollars in an effort to get the economy going.  But despite all these of these extraordinary efforts, the U.S. economy continues to just lie there like a dead corpse. 

Never before have the Federal Reserve and the U.S. government done more to try to stimulate the economy and never before have their efforts produced such poor results.  Home sales continue to set new record lows, more than 14 million Americans continue to be unemployed, foreclosures continue to soar, personal bankruptcies continue to soar and an increasing number of Americans continue to sign up for food stamps and other anti-poverty programs.  All of the things that once worked so well to stimulate the U.S. economy seem to be doing next to nothing here in 2010, and the American people are becoming increasingly frustrated by economic problems that just keep getting worse.

Once upon a time, a big drop in mortgage rates would get Americans running out to buy homes in big numbers.  But that is just not happening this time. 

As you can see from the chart below, mortgage rates are at ridiculously low levels right now.  The average rate for a 30-year fixed mortgage was 4.32 percent this week.  That is the lowest it has ever been since Freddie Mac began tracking mortgage rates back in 1971.

These low rates have motivated millions of Americans to refinance their existing home loans,…
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KRUGMAN: LET THE LAWYERS IN CONGRESS SPEND ANOTHER $800B

KRUGMAN: LET THE LAWYERS IN CONGRESS SPEND ANOTHER $800B

Courtesy of The Pragmatic Capitalist 

lawyersPaul Krugman was on CNBC today calling for more stimulus.  He wants to give Congress the ability to spend another $800B in an effort to get the economy going again.  He says this is feasible because the bond market is allowing us to “fund” future spending via historically low rates.  There are a lot of things wrong here, but I’ll keep my comments brief.

First of all, it’s clear that Krugman is still suffering from neo-classical bewilderment.  Despite the operational evidence pointing to the contrary it’s clear that Krugman still believes we are living in a gold standard world where the USA’s deficits really are funded by taxes and bond markets.  Unfortunately for Mr. Krugman, we now live in a non-convertible fiat monetatry system where the USA is the monopoly supplier of currency.  Nonetheless, he still seems to make the connection that we can afford to spend even though it’s obviously not for the correct reasons.

Second, Mr. Krugman has no qualms about giving Congress the last call on where this money gets spent.  This is astonishingly naive in my opinion.  The efficiency of the original stimulus package was low to say the least and the latest CBO figures show that the impacts on the economy have been enough to keep us afloat, but far from enough to solve the actual problems.   What we have here is a balance sheet recession due to a debt bubble and implosion.  So, what we need is balance sheet repair.  We don’t need more solutions that merely kick the can down the road.  We don’t need to stimulate loan growth or to stimulate the banking sector. We don’t need to prop up the housing sector or to stimulate auto sales.  If we’re going to let Congress pass a stimulus bill we should put money in the pockets of the people who need it.  If we’re going to spend money on these plans we should actually target the problems as opposed to letting Congress chop up $800B so they can send 75% of it towards programs that will not even resolve the problem.

Mr. Krugman appears to be towing the political party line here by saying that tax cuts won’t help resolve the problem.  As usual, he’s letting his politics get in the way of his thinking.  I absolutely do not think…
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There’s a Slow Train Coming

There’s a Slow Train Coming

Courtesy of John Mauldin, Thoughts from the Frontline Weekly Newsletter

Transparent clock and moving train (digital)

There’s a Slow Train Coming
A Negative 2% GDP in the Third Quarter?
Small Business Still Has Issues
Italy, Paris, Vancouver, and San Francisco
And a Forbes Cruise to Mexico

Sometimes I feel so low-down and disgusted
Can’t help but wonder what’s happenin’ to my companions,
Are they lost or are they found, have they counted the cost it’ll take to bring down
All their earthly principles they’re gonna have to abandon?
There’s a slow, slow train comin’ up around the bend.

- Bob Dylan

The question before the jury is a simple one, but the answer is complex. Is the US in a "V"-shaped recovery? Are we returning to the old normal? A great deal hinges on the answer, and this week we look at some of the evidence before us.

But first, a follow-up thought to last week’s letter. I wrote about why countries can reduce their private debt, reduce their public debt, or run a trade deficit, but not all three at the same time. If a country wants to see its government run a fiscal surplus (or small deficit) and at the same time its private citizens want to reduce their leverage (common desires throughout the developed world), it must run a trade surplus. That’s a simple accounting statement. If you did not read last week’s letter, you can get to it by going here.

That brings up the deepwater gusher in the Gulf. That it is an unmitigated disaster is an understatement. There is the possibility of the oil getting into the Gulf Stream and going around Florida and landing upon the Atlantic coast. We will be cleaning this up for years.

I am at the moment on a plane to Italy, but if memory serves me right, we run about a $300-billion-dollar trade deficit just in energy purchases. Our trade deficit has been coming down in most other categories but is fairly steady with respect to oil. And as noted above, if we want to get to a place where we are in control of our government deficit, we must reduce that trade deficit.

Oil can and graph with American dollar

Bluntly, we cannot hope…
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MasterCard Study Says Consumer Spending Has Taken A Break

MasterCard Study Says Consumer Spending Has Taken A Break

Courtesy of Mish

Shoppers checkout at a Target store in Virginia

Michael McNamara, Vice President, Research and Analysis for SpendingPulse, observes Consumer Takes a Respite as Spending in Many Sectors Declines.

The momentum in consumer spending that was building through the first quarter, seems to be taking a breather in the second quarter of 2010, at least so far. Financial volatility in the capital markets and ongoing macroeconomic issues could account for this shadow cast over the recovery in consumer spending. Some sectors seem to be responding to specific disruptive events, such as the expiration of the Federal housing tax credits, where previously we’d noticed a beneficial "echo" effect on housing related categories such as Furniture and Furnishings.

In addition, Memorial Day occurring a week later than it did last year, could have pushed some spending into June, 2010. Nevertheless, we continue to see strength in pricing, and in most categories, we are registering solid increases in the SpendingPulse Price Index, indicating that inventories continue to be aligned to demand, and retailers have not had to return to steep discounting.

Price Wars

In response to Michael McNamara’s statement "retailers have not had to return to steep discounting" I counter with Foreclosure Life Raft; Price Wars at Walmart; Electrical Demand Drops Two Straight Years, First Since 1949.

Wal-Mart, Target, Costco, others are clearly in the midst of price wars hoping to capture market share.

YouTube Commentary From McNamara

Here’s a short YouTube video with additional commentary from Michael McNamara.

Factors in Spending Respite

McNamara discusses several factors in the spending respite.

  • Some Memorial Day sales falling into June instead of May. This may benefit June sales.
  • Financial market volatility impacts big ticket items and durable goods.
  • The end of $8,000 housing tax credits pushed forward big ticket spending items like furniture and appliance.

Spending Trends

Interestingly, apparel sales and footwear showed a significant decline although online apparel sales were up 20-30% depending on category.

Furniture sales were down 9% compared to a year ago. This was in spite of a mini-rush to buy housing ahead of the expiring tax credit. Perhaps we see a bump in furniture and appliance sales in June or July after some of those home purchases close, but that will be the last hurrah in my opinion.

Luxury retail spending showed an increase of 9.7%…
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Confirmed: Defense Spending Creates Fewer Jobs Than Other Types of Spending

Confirmed: Defense Spending Creates Fewer Jobs Than Other Types of Spending

Courtesy of Washington’s Blog

Yesterday, I pointed out that a study by one of the leading economic modeling companies shows that military spending increases unemployment and decreases economic growth.

Indeed, an economic paper published in 2007 by The Political Economy Research Institute at the University of Massachusetts, Amherst – entitled "The U.S. Employment Effects of Military and Domestic Spending Priorities" – concludes:
 

We present in Table 1 our estimate of the relative effects of spending $1 billion on alternative uses, including military spending, health care, education, mass transit, and construction for home weatherization and infrastructure repair.

[Click for larger image]

The table first shows in column 1 the data on the total number of jobs created by $1 billion in spending for alternative end uses. As we see, defense spending creates 8,555 total jobs with $1 billion in spending. This is the fewest number of jobs of any of the alternative uses that we present. Thus, personal consumption generates 10,779 jobs, 26.2 percent more than defense, health care generates 12,883 jobs, education generates 17,687, mass transit is at 19,795, and construction for weatherization/infrastructure is 12,804. From this list we see that with two of the categories, education and mass transit, the total number of jobs created with $1 billion in spending is more than twice as many as with defense.

"Military Keynesianism" – the idea that war is the best economic stimulus – is false.

Thanks to Gordon for the tip.

 


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Phil's Favorites

Preparing For Lower Returns

 

Preparing For Lower Returns

Courtesy of 

We’ve been hearing about the prospect of lower future returns for U.S. based investors for years now*. The thesis behind this is fairly straightforward; high recent returns coupled with high valuations in the stock market, and low interest rates in the bond market is not conducive to further above average returns.

Consider the following:

  • A U.S. only 60/40 portfolio has compounded at 10.5% over the last 10 years.
  • The CAPE ratio is at 30.9
  • The ten-year treasury is currently yielding 1.8%

...



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Zero Hedge

Containing The Huawei 'Virus'?

Courtesy of ZeroHedge View original post here.

Authored by James Gorrie via The Epoch Times,

The deadly virus originating out of the central Chinese city of Wuhan is making headlines, and well it should. There’s the potential for this new coronavirus to spread rapidly from China to the rest of Asia and the West.

The virus attacks victims’ immune systems, compromising their health and threaten...



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The Technical Traders

The Wuhan Wipeout - Could It Happen?

Courtesy of Technical Traders

News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.

In most of Asia, the Chinese New Year is already in full swing.  Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.  Millions of people have already traveled hundreds of thousands of miles to visit family...



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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.

When crude oil tops or bottoms, it seems that ...



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Insider Scoop

5 Software-Application Stocks Moving In Thursday's After-Market Session

Courtesy of Benzinga

Gainers

Atlassian Corporation, Inc. (NASDAQ:TEAM) stock surged 9.7% to $145.50 during Thursday's after-market session. According to the most recent rating by Morgan Stanley, on January 13, the current rating is at Overweight.

Diebold Nixdorf, Inc. (NYSE:DBD) shares increased by 8.1% to $11.48. The most recent rating by DA Davidson, on December 13, is at Buy, with a price target of $17.00.

Telaria, Inc. (NYSE:TLRA) stock rose 4...



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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

Reminder: We are available to chat with Members, comments are found below each post.

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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Comment: This would be HUGE...got gold!


...

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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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