The Marriage of Mercantilism and Corporatism: When Free Trade Is Not ‘Free’
by ilene - September 13th, 2010 10:45 pm
The Marriage of Mercantilism and Corporatism: When Free Trade Is Not ‘Free’
Courtesy of JESSE’S CAFÉ AMÉRICAIN
"The consequences of this policy are also stark and simple: in effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different." Paul Krugman
And he is exactly right. As regular readers know this matter of Chinese mercantilism and its toleration and acceptance by the West has been a key observation and objection here since 2000. Any economist who does not understand that devaluing and then maintaining an artificially low currency peg with a trading partner distorts the nature of that trade should review their knowledge of algebra.
And yet it was in 1994 during the Clinton Administration that China was permitted to obtain full trading partner "Most Favored Nation" status, while vaguely promising to float their recently devalued currency some day, and address the human rights issues that were endogenous to their non-democratic, totalitarian government.
"From 1981 to 1993 there were six major devaluations in China. Their amounts ranged from 9.6 percent to 44.9 percent, and the official exchange rate went from 2.8 yuan per U.S. dollar to 5.32 yuan per U.S. dollar. On January 1, 1994, China unified the two-tier exchange rates by devaluing the official rate to the prevailing swap rate of 8.7 yuan per U.S. dollar." Sonia Wong, China’s Export Growth
This served Mr. Clinton’s constituents in Bentonville quite well, and has some interesting implications for the Chinese campaign contributions scandals. It supported the Rubin doctrine of a ‘strong dollar’ while facilitating the financialization of the US economy and the continuing decline of the middle class wage earners, under pressue to surrender a standard of living achieved at great cost. "How I Learned to Stop Worrying and Love the Currency Collapse." and China’s Mercantilism: Selling Them the Rope
Not to limit this, George W. ratified the arrangement when he took office, and so it has gone on for almost fifteen years…
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Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number
by ilene - July 2nd, 2010 10:30 pm
Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number
Courtesy of JESSE’S CAFÉ AMÉRICAIN
I like Mish Shedlock. He has intellectual integrity, and even when we occasionally disagree, as I recall over the inevitability of deflation and some of its particular consequences and manifestations, I listen to his arguments carefully. He draws conclusions that are difficult to fault. Most of the time we seem to be in agreement.
In his most recent blog, he indirectly poses an interesting question.
"Hidden beneath the surface the BLS Black Box – Birth Death Model added 145,000 jobs. However, as I have pointed out many times before, the Birth/Death numbers cannot be subtracted straight up to get a raw number. It contributed to this month’s employment total for sure, but the BLS will not disclose by how much."
Mish Shedlock, Jobs Decrease by 125,000
Here are the Imaginary Jobs added to the Non Farm Payrolls from the Birth Death Model of the BLS. As Mish reminds us, (thank you Mish. I have been nagging bloggers about this for years), the Imaginary Jobs are added to the unadjusted payroll numbers, which are dramatically impacted by the seasonal adjustments, which are sometimes quite significant.
I include this second chart show the Birth – Death numbers over time to show the historical trend. It is remarkable how ‘regular’ this number has been over the past six years despite an epic recession that devastated small businesses, which is purportedly what this model tracks.
Here is a visual depiction of the Seasonally Adjusted and the Unadjusted Non-Farm Payroll Numbers. As you can see, the adjustment is sometimes very significant. Remember, the Birth Death imaginary jobs are added to the unadjusted number, which is indicated in maroon on this chart.
So obviously one can calculate the ‘seasonality factor’ using a simple formula
Seasonality Factor (SF) = Seasonally Adjusted Number (SA) / Non-Seasonally Adjusted Number (NSA)
I do this each month in the Payrolls Spreadsheet that I maintain. I like to see if the BLS changes its calculations and assumptions over time, especially when they do major revisions.
And although I have never shown it in this blog before, it is relatively…
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Keiser Report No.19: Markets! Finance! Scandal! – And Karl Denninger
by ilene - February 24th, 2010 2:59 pm
Keiser Report No.19: Markets! Finance! Scandal! – And Karl Denninger
Courtesy of JESSE’S CAFÉ AMÉRICAIN
Although I don’t always agree with them, obviously, I am always interested, informed, and entertained by what madcap Max Keiser and his cerebral colleague Stacy Herbert have to say on The Keiser Report. As you may know, Max is the latest American in Paris, having left the States after selling his Hollywood Stock Exchange to Cantor Fitzgerald of Wall Street. Perhaps some day we can have a drink at the Ritz and philosophize, as expatriates are often wont to do, about the tragic transience of empire. The Ritz. Alas, when I was a visiting student at ESSEC I could not afford it, and now that I can, I do not get out much anymore. But who can tell what the future may bring.
The most recent broadcast of the Keiser Report has an added attraction in its second half, Karl Denninger. Karl is probably more familiar to our American patrons as theoutre financial commentator from The Market Ticker.
Karl always has something interesting to say, spoken plainly, and without the kind of courtly manner towards corporate America that is so fashionable among the journalists in the mainstream media who are members of the Wall Street demimonde.
Mr. Denninger is particularly effective, when he gets it right as he frequently does, in describing complex transactions because he is not an economist or a financial professional, but a computer engineer, an honest technical sort, who brings some formidable analytical skills to a relatively unfamiliar subject. He often gets ‘nit-picked’ by the pros who play word games with their jargon, but more often than not he is directionally correct.
And he occasionally admits it when he is wrong, and changes tack, a refreshing trait amongst the greater universe of financial commentators. But if you post on his chat board, be prepared for ideological frisking, and little patience for deviation from the local standards and fundamental assumptions. A weakness perhaps, from the perspective of ideological diversity, but more common than most moderators care to admit.
Enjoy.
Bonus post by Jesse at the Cafe,
How Bad Can It Get?
They have our money. What more can they want?
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Alternative View: Housing Prices Have Fallen Significantly Towards the Trend
by ilene - November 18th, 2009 9:26 pm
Update by Jesse at the Cafe regarding housing prices. Glad to see I’m not the only person who struggled with the flu vaccine dilemma. To avoid the mercury, there’s FluMist, with the added attraction of delivering the (attenuated) virus via the natural route, through the respiratory system, rather than injected directly into the blood. It’s not recommended for those with asthma, however. Currently, the swine flu vaccine is not available in my city, but I did manage to track down the seasonal vaccine for a couple loved ones. The seasonal flu vaccine appears to afford some protection against swine flu. Nothing available for me, however, making my indecision rather besides the point for the time being.
Best wishes for a speedy recovery with no notable residual brain damage, Jesse. - Ilene
Alternative View: Housing Prices Have Fallen Significantly Towards the Trend
Courtesy of Jesse’s Café Américain
Here is the graph associated with a view of the deflating housing bubble that shows we have appreciably fallen, further than the 25% in the blog entry from yesterday.
For the details on this view read here.
It appears that both sets of numbers, the ones above and the ones from yesterday, have been adjusted somewhat.
The numbers from yesterday are Indexed to 1980 = 100, and are therefore a percentage of increase.
The numbers above are nominal prices, and then adjusted for inflation using some governmental measure presumably.
One appears to be based on median prices, and the other on total transactions.
I have not yet reconciled the two views, as I am rather tired and ‘under the weather,’ compliments of the children’s propensity to bring home their sniffles and sneezes at this time of year, the head colds that seem to linger endlessly, despite the repeated application of vitamins, chicken soup, sudafed, ibuprofen, and the occasional sip of Beaujolais Noveau. But for today at least I am, like Mr. Buffett is to the economic recovery, ‘all in.’
And yes, I did finally break down and listen to the spouse, obtaining a swine flu vaccination. Perhaps the mental slowness is merely due to my mercuy addled brain. Perhaps it will help me think like a Fed banker and figure out their gameplan. lol.
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Long Term Weekly Gold Chart Targets 1275
by Chart School - November 4th, 2009 11:26 am
If you missed my enlightening interview with Jesse, click here. – Ilene
Long Term Weekly Gold Chart Targets 1275
Courtesy of Jesse’s Café Américain
Now that gold seems to have successfully broken out from its continuation pattern (ascending triangle or inverse H&S) we should be able to chart its targets more precisely than the chart from 24 September that at least successfully projected the breakout.
If there is a major liquidation event, such as an equity market dislocation, gold will likely be hit as well, but will provide an exceptionaly buying opportunity and would historically rebound more sharply than equities and most other investments.
As always, this is a forecast with some probablities of success, rather than a prediction. It will therefore be subject to change, and will meet with a variety of success, or not.
Basically, the ascending triangle calls out 1275 and an inverse H&S targets 1300ish. A confirmed breakdown below 1000 deactivates the formations. We will know more about the first pullback when we see how far this current leg goes. It has moved much more quickly so far than most have imagined, but the short term trend is quite apparent on the chart.
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site