10-Year Treasury yields fell to their lowest level in more than 50 years on Friday, responding to heightened uncertainty in Europe. The flight to safety warns of further stock market weakness in the week ahead.
Dissecting the Lies in Obama’s $447 Billion ‘Shock-and-Awe’ Reelection Ploy | Mike Shedlock
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
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.
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.
$1.2 Trillion Is Not Enough
Budget experts from both political parties warned at a Business Roundtable forum on Tuesday that the congressional Super Committee preparing for its first meeting later this week needs a long-term vision that goes beyond cutting $1.2 trillion from the federal deficit over the next decade.
“These guys have only a 10-year window. They can get $1.2 trillion fairly easily. But don’t think that’s success,” said Alice Rivlin, founding director of the Congressional Budget Office and a senior fellow at the Brookings Institution. “Success is putting in place longer-term reforms that are going to stabilize the debt… it means a lot more than $1.2 trillion, and it means ultimately what would come out of this would be more like $4 trillion or $5 trillion.”
Denial is not a river in Egypt
Dow Jones Industrial Average rallied, suggesting a second higher low above primary support at 10600/10800. Expect a test of 11900/12000, but this does not mean the bear market is about to reverse. We are still in the early “denial stage” of the bear market, identified by sporadic bargain-hunting, high volatility and a general lack of direction. Declining volume indicates a lack of enthusiasm from buyers and sellers. Failure of primary support would change that, leading to a sharp fall to 10000*.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
Number for the day is 45.0%
The percentage of containers that were shipped empty from the Port of Los Angeles during the 2011 financial year was 48.42% (or 1.8 million twenty-foot units). Incoming containers received empty were a mere 3.42%. Our number for the day is the net 45.0% of incoming containers that are returned empty to their port of destination.
Shippers attempt to fill containers on their return journey, even at super-low rates, in order to offset the cost of completing the round-trip. Empty containers indicate failure to locate manufactured goods that can compete in these export markets. This affects not only the shipper, but the entire economy. You see, those containers leaving the West Coast are not really empty. They contain something far more valuable than the goods being imported. They contain manufacturing jobs — and the infrastructure, skills and know-how to support them.
In 2012, if you need an independent gauge of how successful the President’s jobs program has been, check this number.
Flight to safety
10-Year Treasury yields fell to a new low on Friday, warning of further falls in the stock market as investors seek save havens in Treasurys and precious metals.
