Monday, April 21, 2014

Some morning news: they can't shut me up forever!

Had a bit of a kerfuffle with my computer this morning. It's cleared up now, but extra-suspiciously; so my latent paranoia means I'm now on the lookout for NSA involvement in my computer.

Because you damn well know that I'm going to be the first voice they want to silence when Obama brings in his New World Ordure.

Anyway, they haven't shut me down yet, so here's the news:

New Deal Demoncrat - last week's economic indicators. Summary:
In general, the long leading indicators again continued their 2014 trends. Treasury rates declined further below their December highs. Money supply continued its rebound, although there was a little softness for the week.  Bank lending rates remain low.  Only housing related data, in the form of negative real estate loans, which turned slightly negative, and mortgage applications, which improved this week, but continued poor, constitute a negative sector.

The short leading indicators were generally very positive this week.  Initial jobless claims had their best 4 week average since the recession.  Credit spreads made another new post-recession low. Temporary jobs tied for an all-time high.  Commodities were slightly positive.  Gas and oil remained slightly negative, as their seasonal increase is now enough to engage the oil choke collar.

The coincident reports were more mixed.  Consumer spending was positive.  Rail transport was also strongly positive. Shipping was mixed.  Tax withholding, however, turned negative, and steel remained negative.
This week was mixed, but with an emphasis on the positive.  There are a few trouble spots (steel, real estate loans, tax withholding), but the economy seems to be in good shape for now.
Translation: quit being a fucking pussy.

Ritholtz - what's gone up might not necessarily come down. He makes the case for not being a fucking pussy just because the US market went up last year.

New Deal Demoncrat - on creeping deflation and secular stagnation. the answer is simple:
one of the primary reasons for the slow growth is the rise of austerity policies in all three countries.  The standard macro-economic policy response to a recession is an increase in government spending.  Using the simple GDP equation: when C (consumer spending), I (Investment) and X (net exports) all decrease, G (government spending) makes up the difference.  During periods of economic slowdown, government spending has a higher mulitiple, meaning it has more of an impact; for every dollar spent more than an dollar of economic activity will result.  In fact, the IMF published a paper during the crisis which demonstrated the decreased government spending in periods of economic malaise was a direct cause of the slow growth seen throughout the developed world.
So thus the solution is simple.

New Deal Demoncrat - further to the previous. He points out the fundamental hypocrisy of Larry Summers:
The below quote, from Larry Summers describing his "secular stagnation" theme,  in particular leapt out at me:
 in such a situation falling wages and prices or inflation at slower-than-expected rates is likely to worsen economic performance by encouraging consumers and investors to delay spending, and to redistribute income and wealth from higher spending debtors to lower spending creditors.
In 2008-09, we could have bailed out debtors, or we could have bailed out creditors. Had we bailed out debtors, the debtors could have used that bailout money to renegotiate, pay down, or pay off their debts to the creditors, and then both would be made reasonably whole.  Bailing out creditors rescued them, but didn't cancel the debt, and so debtors still had to deleverage and pay off the debts, a painful and slow process.
At that critical juncture, none other than Larry Summers had the most powerful position possible to argue in favor of bailing out debtors, but did not do so.  We chose creditors, and we've been paying the price since.

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