Obama: And everything in this bill will be paid for. Everything.
Mish: That is lie number 3……. Obama’s stimulus plan is nothing but another spend now, make cuts later “sleight-of-hand” proposal.
Obama: The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working…….
Mish: That is lie number 4. The primary purpose of the American Jobs Act is simple: To keep one person (namely President Obama), in his job.
Dow acid-test
The Dow is headed for the band of support between 10600 and 10800 — a real acid-test. Support is likely to fail unless we see a substantial increase in volume, indicating buying support. Breach of 10600 would confirm another down-swing with a target of 10000*.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
European stocks threaten breakout
DJ Europe Index ($E1DOW) reversed below 230, threatening another down-swing — with a target of 200. Twiggs Momentum oscillating below zero indicates a primary down-trend. Follow-through below 225 would confirm the bear signal.
* Target calculation: 230 – ( 270 – 230 ) = 190
A New New Deal – Truthdig
Decades of experience, in nations across the globe, provide ample evidence that while the private sector plays an important role, it cannot by itself provide employment for all who want to work.
There is a way to do that: The government could serve as the “employer of last resort” under a job guarantee program modeled on the WPA (the Works Progress Administration, in existence from 1935 to 1943 after being renamed the Work Projects Administration in 1939) and the CCC (Civilian Conservation Corps, 1933-1942). The program would offer a job to any American who was ready and willing to work at the federal minimum wage, plus legislated benefits. No time limits. No means testing. No minimum education or skill requirements.
……To avoid simple “make-work” employment, project proposals could be evaluated on the following criteria: (a) value to the community; (b) value to the participants; (c) likelihood of successful implementation of project; (d) contribution to preparing workers for employment outside the program.
via What the Country Needs Is a New New Deal – Truthdig.
Comment:
Infrastructure projects are one way to get the unemployed back to work and are to some extent offset by savings in unemployment benefits. I would add one qualifier to the selection of infrastructure projects: they must be selected in terms of return on investment (ROI) and not on the number of jobs created. Projects that earn a market-related return on investment—whether toll roads, high-speed rail, new port facilities or national broadband networks—will generate revenues that can be used to repay the debt incurred. At the right time, they can also be sold off to private investors in order to generate funds for further projects. Money invested in schools, libraries, universities and research should be funded out of revenue, and not from increased government borrowing, simply because they do not generate new revenues. Instead they require ongoing expenditure to staff, operate and maintain the new facilities. Read more in my discussion of Austerity and Infrastructure Spending.
What the Country Needs Is a New New Deal – Truthdig
The problem is that the president believes we can cure our jobless problem by providing the proper incentives to the business community. And here he is committing one of the few big policy blunders from Lyndon Johnson’s War on Poverty. Like Johnson, who focused on retraining the unemployed for jobs that did not exist, Obama has focused on incentivizing the businesses community to hire workers to produce for customers that do not exist.
……The truth is simple and contrary to these views. Business will not hire more workers until it has more sales. Consumers will not spend more until they’ve got more jobs.
via What the Country Needs Is a New New Deal – Truthdig.
Euro breaks support at $1.40
The euro broke support at $1.40 after a descending triangle lasting several months. Breakout was most likely precipitated by the resignation of Jurgen Stark from the ECB. Target for the breakout is $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
ECB’s Top German Representative Resigns – WSJ.com
Germany’s top representative on the European Central Bank resigned in an apparent protest of the bank’s recent interventions in euro-zone debt markets…….Jürgen Stark is stepping down “for personal reasons,” the ECB said in a statement…… Mr. Stark, one of the ECB’s most outspoken anti-inflation “hawks,” had opposed the ECB’s decision last month to reactivate its government bond purchase program….
ICI – Trends in Mutual Fund Investing, July 2011
The combined assets of the nation’s mutual funds decreased by $219.2 billion, or 1.8 percent, to $12.009 trillion in July, according to the Investment Company Institute’s official survey of the mutual fund industry.
Aussie Dollar weakens
The Aussie Dollar is testing support at $1.045 against the greenback; failure would warn of another down-swing to parity*. Breakout above $1.075, however, would re-visit $1.10.
* Target calculation: 1.05 – ( 1.10 – 1.05 ) = 1.00
AUDUSD is strongly influenced by commodity prices and closely tracks the CRB Commodities Index. $CRB is rising and breakout above 350 would indicate a primary advance to 385* — suggesting increased support for the Aussie Dollar.
* Target calculation: 350 + ( 350 – 315 ) = 385
GBP tests support
The Pound is testing support at $1.60/$1.59 against the greenback, dragged down by rising calls for another round of quantitative easing to assist the flagging UK economy. Failure of support would signal a primary down-trend with a target of $1.53*.
* Target calculation: 1.60 – ( 1.67 – 1.60 ) = 1.53