Monday, September 7, 2015

Some Monday news

It's Labour Day, the holiday where traditionally our mothers remind us about how they went through 18 hours of childbirth to bring us into the world, blah blah, and then we reply to them that we damn well didn't ask to be born did we.

And here's some news:

New Deal Demoncrat - US domestic indicators remain strong. NDD thinks the US is maintaining growth in a global recession; I think he's succumbing to the general Lamestream Media panic. Sorry, but China is still growing, Japan's still vaguely growing, and god knows maybe Europe will pull their head out their asses soon.

Speaking of which, a million Syrian refugees in Germany would be a godsend for Europe: it would force the skinflint Germans to finally increase spending, which would be very expansionary for the entire continent. And it's nice to see that Merkel is finally standing up to the Nazis in the Bavarian CSU like Seehofer. Maybe, down deep, there are still a few Germans who wish to spread kindness through the world?

The Krugginator - the Fed should remember the 90s. Quote:
Well, consider the situation in 1997, when the unemployment rate dropped through 5 percent. The Fed did raise rates a quarter point, but then stopped, waiting for inflation to become a problem — which it never did, even though unemployment continued to fall, eventually to 4 percent.

The lesson is that the Fed really doesn’t know what level of U3 constitutes full employment, and should be very cautious about acting preemptively absent any signs of inflation problems.

Why is this time different? Many people seem to think that the case for raising rates is made stronger by the fact that we’re currently at zero, which seems weird and unnatural. But if you actually think through the logic, it’s the other way around. When the Fed funds rate was 5 percent, there was room to cut if a rate hike turned out to be premature — that is, the risks of moving too soon and moving too late were more or less symmetrical. Now they aren’t: if the Fed moves too late, it can always raise rates more, but if it moves too soon, it can push us into a trap that’s hard to escape.
Dammit K-dog, please remember that Janet Yellen knows at least as much about macroeconomics as you. She's not dumb.

Reuters - China emphasizes stability at G20. They repeat for the lamestream media all the things that seem to have been forgotten in the rush to puke stocks:
China's overall GDP growth will remain around 7 percent, as predicted earlier in the year, and the new economic normal may last for four to five years, Lou said. The government will not particularly care about quarterly economic fluctuations and maintain steady macro-economic policy, he added.
it may already take several years to digest excess industrial capacity and inventories
Did everyone forget about Chinese overcapacity, and that the government was taking steps to shut down the dregs of their economy? Y'know, maybe that would affect electricity consumption, and rail loads, and iron ore demand?

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