Economy Archives - Page 124 of 133 - the patient investor

February 9, 2012

Did Economy Really Create 500,000 Jobs? – WSJ

A recent study by economists Katharine Abraham and John Haltiwanger at the University of Maryland, Kristin Sandusky at the Census Bureau and James Spletzer at the Labor Department found “substantial discrepancies” between employee payrolls and the household survey used to calculate Unemployment.

Some 6.4% of people who showed up as holding jobs on employee records were recorded as unemployed in the household survey. Many of them were 65 and older — which suggests they were people who considered themselves retirees even as they continued to draw some sort of paycheck. An even larger 17.6% of people who counted as employed in the household survey didn’t show up on employee records. Many of them had demographic characteristics, such as low education levels, that suggested they were working off the books.

via Did Economy Really Create 500,000 Jobs? – Real Time Economics – WSJ.

February 8, 2012

US Labor Force Participation Rates

The Chicago Fed attributes part of the decline in US labor force participation to the baby boomer phenomenon producing a growing number of retirees, but this chart from their newsletter excludes retirees and highlights the real problem.

Female LFPR are expected to fluctuate by about 1 percent (from 1987 to 2020) while male college graduates have fallen by about 2 percent. Male high school graduates, however, have fallen by 6 percent and do not look like recovering any time soon. The primary cause is the declining manufacturing sector and loss of construction, banking and real estate jobs as a result of the housing market crash.

US Labor Force Participation Rates, Ages 25 to 54

February 8, 2012

New Economic Perspectives: Banks Weren’t Meant to Be Like This. What Will their Future Be – and What is the Government’s Proper Financial Role?

So we are brought back to the question of what the proper role of banks should be. This issue was discussed exhaustively prior to World War I………

It was above all in Germany that long-term financing found its expression in the Reichsbank and other large industrial banks as part of the “holy trinity” of banking, industry and government planning under Bismarck’s “state socialism.” German banks made a virtue of necessity. British banks “derived the greater part of their funds from the depositors,” and steered these savings and business deposits into mercantile trade financing. This forced domestic firms to finance most new investment out of their own earnings. By contrast, Germany’s “lack of capital … forced industry to turn to the banks for assistance,” noted the financial historian George Edwards. “A considerable proportion of the funds of the German banks came not from the deposits of customers but from the capital subscribed by the proprietors themselves.[3] As a result, German banks “stressed investment operations and were formed not so much for receiving deposits and granting loans but rather for supplying the investment requirements of industry.”

via New Economic Perspectives: Banks Weren’t Meant to Be Like This. What Will their Future Be – and What is the Government’s Proper Financial Role?.

Comment:~ The author contrasts the short-term focus of modern banks with the long-term outlook of the early German banking system which was largely equity-funded, rather than deposit-based. The question is: could we ever successfully return to such a system?

February 8, 2012

Peter Schiff Speaks to James Rickards, Author of Currency Wars | Peter Schiff | Safehaven.com

James Rickards: The dollar is not necessarily on the road to ruin, but that outcome does seem highly likely at the moment. There is still time to pull back from the brink, but it requires a specific set of policies: breaking up big banks, banning derivatives, raising interest rates to make the US a magnet for capital, cutting government spending, eliminating capital gains and corporate income taxes, going to a personal flat tax, and reducing regulation on job-creating businesses. However, the likelihood of these policies being put in place seems remote – so the dollar collapse scenario must be considered.

via Peter Schiff Speaks to James Rickards, Author of Currency Wars | Peter Schiff | Safehaven.com.

February 7, 2012

Westpac Economic Update: RBA leaves rates unchanged

The Board of the Reserve Bank surprised us with a decision to hold the cash rate unchanged at 4.25%. Whilst this indicates that for the time being the Bank is assessing the risks somewhat differently to ourselves we are not inclined to change our core view that a further 50bps in easing can be expected over the course of the first half of this year.

Bill Evans
Chief Economist

February 2, 2012

David Stockman on crony capitalism – Bill Moyers

Bill Moyers interviews investment banker and former Reagan budget director, David Stockman:

Crony capitalism: the revolving door between Washington and Wall Street. A 53-minute video, but worth the time.

February 2, 2012

The Euro Crisis Makes Absolutely No Sense – Brett Arends (WSJ)

WSJ: Mean Street

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Brett Arends exposes flaws in Eurozone efforts to resolve the currency crisis.

January 30, 2012

Baltic Dry Index reflects falling demand from China

The Baltic Dry Index has fallen by more than 60 percent in the last 3 months, headed for a test of its 2008 low at 600. The index reflects bulk international shipping rates and is dominated by Capesize iron ore and coal shipments to China. Its fall coincides with a 23 percent drop in iron ore spot prices over the last quarter of 2011. Falling demand for raw materials from China warns that economic activity is slowing rapidly and there may not be a soft landing.

Baltic Dry Index

Australia and other resource-rich economies will need to brace themselves for a sharp fall in exports over the year ahead.

January 30, 2012

Bill Moyers: How power and influence helped big banks rewrite the rules of our economy

Bill Moyers talks with former Citigroup Chairman John Reed and former Senator Byron Dorgan to explore a momentous instance: how the mid-90’s merger of Citicorp and Travelers Group — with help from Alan Greenspan, Robert Rubin and Bill Clinton — brought down the Glass-Steagall Act and sowed the seeds of the GFC.

January 28, 2012

Living In A QE World | Jim Bianco

Central banks are ruling markets to a degree this generation has not seen. Collectively they are printing money to a degree never seen in human history.

So how does this process get reversed? How do central banks pull back trillions of dollars of money printing without throwing markets into a tailspin? Frankly, no one knows, least of all central banks as they continue to make new money printing records.

…..When/If these central banks go too far, as was eventually the case with home prices, expanding balance sheets will no longer be looked upon in a positive light. Instead they will be viewed in the same light as CDOs backed by sub-prime mortgages were when home prices were falling. The heads of these central banks will no longer be put on a pedestal but looked upon as eight Alan Greenspans that caused a financial crisis.

via Living In A QE World | The Big Picture.