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JAD_333
06 May 14,, 05:38
This a take from a British paper, but the data should be publicly available. Are things really this good? If so, who gets the credit? Traditionally the president does by virtue of its having taken place on his watch. As a conservative (5th degree out of a possible 10) I will admit this is positive news, and I would give definitely give Obama a chunk of the credit. I would also credit the GOP for its bulldog intransigence on spending bills and push for budget cuts. The Fed also comes in for a pat on the back for holding interest rates down and for its quantitative easing stimulus. We could also go back to Bush jr and the bank bail outs, but that might be a stretch. The final unsung hero--actually two--are first the energy sector for its innovations which swelled domestic oil and gas production and second the stabilization of the industrial sector thanks to China not being such a cheap labor market any longer.

Views welcome:


America has conquered its debt crisis with incredible speed - Telegraph (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10783568/America-has-conquered-its-debt-crisis-with-incredible-speed.html)


America has conquered its debt crisis with incredible speed

US Congressional Budget Office expects the budget deficit to drop to 2.8pc of GDP this year, and 2.6pc next year
A sheet of uncut $100 bills is inspected during the printing process at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas
Five years after the Lehman crisis, US output is climbing to new peaks Photo: AP
Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard

12:06AM BST 24 Apr 2014

Americans are purging their excesses one by one. Spending by the US Federal government has seen the steepest drop as share of national income since demobilisation after the Second World War.

Claims that President Barack Obama is bankrupting America with a lurch towards hard-Left statism are for tabloid consumption only. Outlays have fallen from 24.4pc to 20.6pc of GDP in five years. Spending is roughly in line with its 40-year average. This fiscal squeeze has been achieved without driving the economy into recession or a Lost Decade, a remarkable feat.

The US Congressional Budget Office expects the budget deficit to drop to 2.8pc of GDP this year, and 2.6pc next year. This is about the same as the eurozone but with a huge difference. The US economy is expanding fast enough to outgrow its debts.

The US energy revolution is of course half the story. It has stoked booms across the Dakotas, Wyoming, Nebraska, Washington, Oregon, Utah and Texas.

Francisco Blanch, from Bank of America, estimates that shale gas and oil have given the US economy an extra tailwind worth 1.9pc of GDP - what he calls the "energy carry" - with effects rippling through the chemical and plastics industries. New investments in ammonia plants are rising at an exponential rate, thanks to natural gas prices that are $4.40 (per BTU) in the US and $15 on Asia's spot market.

The US transferred more than $3 trillion to oil exporters from 2001 to 2008. That chapter is closed. The US is back to where it was in 2000 with an energy deficit well below 2pc of GDP and improving every month, while the eurozone is at -4.4pc and getting worse, and Japan is at -6.3pc.

The US has added 2.5m barrels a day of crude output over the last three years, almost as much as the next three countries combined. America covered a quarter of its oil needs in 2007. It covers well over half today. It has overtaken Russia to become the world's biggest exporter of refined petroleum products, and will soon be an exporter of liquefied natural gas aswell.

For more than half a century the US has been losing part of its industry with each recession. A study by the International Monetary Fund found that the pattern has been very different this time. Manufacturing has recovered quickly, led by machinery, computers and electronics. America's global share of manufacturing has stabilised at 20pc. China's share has also stabilised, at exactly the same level. The two superpowers are competing toe-to-toe for factory dominance. China is no longer gaining.

Yet the other half of the story is monetary stimulus a l'outrance - quantitative easing - to offset fiscal tightening and prevent a "pro-cyclical" downward spiral, which is what occurred when the European Central Bank jumped the gun and raised rates twice in 2011 before recovery was entrenched, setting off the catalysmic crisis that nearly destroyed EMU in mid-2012.

This policy mix is no novelty. Britain pursued the same strategy with success after leaving the Gold Standard dollar-peg in 1931 and after leaving the ERM fixed system in 1992, and arguably again over the last five years though the jury is still out this time.

America's public debt has peaked at 72.3pc of GDP (bonds held by the public). The CBO expects the ratio to fall gently for the next three years. Such is the magic of the denominator effect. Economies do not have to cut debt in absolute terms to whittle away debt. The Romanian dictator Nicolae Ceaușescu thought otherwise and assiduously paid off Romania's debts just in time for his own execution in 1989. Those shaping eurozone policy today sometimes seem to be in thrall to this same atavistic belief.

Growth does the job so much faster. US household debt has plummeted from 98pc to 81pc of GDP in four years. The ratio of debt payments to disposable income fell to 9.9pc in March, the lowest since the Federal Reserve's modern data series began in 1980. Most mortgage debt is locked at fixed interest rates so this will not change fast when the Fed tightens in earnest.

Charles Dumas from Lombard Street Research -- author of the America Phoenix in 2011, before it was fashionable -- says the mix of "soaring household wealth" and lower debt burdens leaves the US poised for a surge in consumer-led growth. He predicts a mini-boom, lasting until 2016.

The numbers of mortgages in negative equity have dropped to 19.4pc from 31.4pc two years ago, according to Zillow Real Estate Research. Over 4.8m households have been liberated. This is accelerating as US home prices claw back most of the 35pc drop from peak-to-trough.

Much of the debt has been cut by defaults, chiefly by home-owners throwing in their keys. You can do this in most US states, and rightly so. America's bankruptcy doctrines evolved with the injustices of colonial debt servitude still in the collective mind.

James Madison argued in the Federalist Papers before the American Revolution that treating debtors as criminals impeded risk-taking and commerce. A series of bankruptcy laws in the 19th Century gradually broke the lockhold of vested interests, levelling the playing field between debtors and creditors, with powerful effects on US economic dynamism.

Much of Europe still clings to late Medieval notions of debt sanctity, with laws to match, though a spate of suicides is forcing reform. In Spain the banks can sieze all your current and future assets if you cannot pay the mortgage - which tends to happens when the jobless rate jumps from 8pc to 26pc - adding the legal costs of foreclosure for good measure. Leaving aside the morality of state coercion to uphold the interests of creditors alone, this practice is inefficient. It blocks the cleansing process of boom-bust cycles, trapping economies in excess debt.

Data from the OECD show that the varied effects of Europe's debt laws, contractionary policies, and a needless double-dip slump, led to jumps in public and private debt (non-financial) by 30pc of GDP in Spain, 33pc in Holland, 34pc in Italy, 51pc in France, 71pc in Portugal and 151pc in Ireland, between 2008 and 2012. Europe's harsh methods have been self-defeating even on their own terms.

It is true that bond yields have tumbled to record lows across the EMU debtor bloc this year but that is not in itself sustainable recovery. What these yields reflect is that EMU is close to deflation and unlikely to grow vigorously for a long time. German Bunds used to be the barometer of such macro-economic judgments. Club Med debt has become a proxy too now that German Chancellor Angela Merkel -- though not the German constitutional court -- has allowed the ECB to back-stop Italian and Spanish debt as a lender-of-last resort.

Five years after the Lehman crisis, US output is climbing to new peaks and unemployment is 6.7pc. Euroland has yet to regain its 2008 output, and the jobless rate is stuck at 12pc. Austerity is not the variable. The US fiscal squeeze has been just as draconian. The Fed kept nominal GDP on an even keel. The ECB did not.

You might say that QE is just a beggar-thy-neighbour policy by stealth, an allegation made by India's central bank governor Raghuram Rajan in a speech this month. The Fed fought back against China and the mercantilist powers by driving the dollar down to a tolerable level, and the US is now enjoying a devaluation windfall. Europe opted instead for a hard-euro policy regardless of circumstances, and has allowed the industrial core of Southern Europe to be hollowed out as a result.

America still has a lot of debt to clear. The errors of the pre-Lehman boom and the fifty year cycle of rising leverage that preceded it have left a debt burden comparable to the effects of a major war.

Yet predictions of inevitable American decline that had such resonance five years ago already look oddly dated, a misreading of underlying economic and geopolitical power. The concept of the BRICS no longer has any economic meaning. Brazil and Russia fell by the way side long ago. India is decades away from any real challenge. Only China counts.

History is full of such false declines. Informed opinion thought Britain finished after losing America, but it was actually France that was ruined by the costs of the Revolutionary War. Britain was just about to embark on its greatest days.

The Roman Empire seemed beyond saving by the start of the Second Century. It was instead the precursor of the Antonines, almost 80 years of stability and wealth. America's governing institutions still work remarkably well. There is no necessary reason why America cannot enjoy its own Antonine revival until the middle of this century.

DOR
06 May 14,, 07:01
Generally an excellent analysis, although a bit generous in its thinking on EuroZone austerity failure, and wholly lacking in any mention of the fourth wheel, Japan and Abenomics.

It also seems to have over looked the fact that with Congress on strike, the Fed had to do all the heavy lifting alone, which isn't optimal and certainly has slowed the recovery. Call it good politics, bad patriotism.

JAD_333
06 May 14,, 07:18
Generally an excellent analysis, although a bit generous in its thinking on EuroZone austerity failure, and wholly lacking in any mention of the fourth wheel, Japan and Abenomics.

It also seems to have over looked the fact that with Congress on strike, the Fed had to do all the heavy lifting alone, which isn't optimal and certainly has slowed the recovery. Call it good politics, bad patriotism.

Articles of this sort rarely bat 100%, but I thought this one got most of it right. Seeing the positive earnings reports of most major US corporations and the uptick in new housing starts, among other signs, the economy definitely seems to be moving in the right direction. This could spell trouble for the GOP this fall, as Obamacare as an GOP issue may be a tired horse by then. On the other hand, the GOP might spin the recovery in its favor if it frames the issue astutely. All in due time...

astralis
06 May 14,, 14:32
the US has a debt -problem-, not a debt -crisis-. it's amazing how many people don't understand the difference, including i suppose the person whom thought of that title, because it is contradictory to the rest of the article. a good 40% of the article is dedicated to why an extreme focus on debts, both public and private, is bad under the current conditions.

however, i do agree with the overall gist of the article- that the US has recovered faster than her peers, and reports of her economic demise are premature.

JAD_333
06 May 14,, 16:04
the US has a debt -problem-, not a debt -crisis-. it's amazing how many people don't understand the difference, including i suppose the person whom thought of that title, because it is contradictory to the rest of the article. a good 40% of the article is dedicated to why an extreme focus on debts, both public and private, is bad under the current conditions.

You know how it is. The reporter does the article and the editor writes the headline.

SteveDaPirate
06 May 14,, 16:09
I expect the U.S. debt problem to be a receding one as infrastructure is built to take advantage of the new abundance of shale gas. Between export terminals for LNG, and a retooling of more domestic energy infrastructure to take advantage of low natural gas prices, I expect to see U.S. industrial output rise, and energy imports fall. Apparently deficits in petroleum trade accounted for about 40% of the U.S. deficit between 2000 and 2012. This should go a long way towards reducing the debt problem, regardless of Washington's spending habits. I also expect the low natural gas prices to have a side benefit of reducing carbon emissions as power generating stations switch away from coal.

Here is an interesting article about the likely impacts of a reduced dependence on foreign oil sources for the U.S.

Implications of Reduced Oil Imports for the U.S. Trade Deficit - Council on Foreign Relations (http://www.cfr.org/united-states/implications-reduced-oil-imports-us-trade-deficit/p32245)

GVChamp
06 May 14,, 21:58
Short-answer: yes, and you ain't seen nothing yet
Long-answer: Most of the macro-economic indicators show a steadily improving situation. Unemployment has been trending down, mortgage rates are trending up. Industrial production is expanding, profits are healthy, etc. If anything, we should be poised for a strong up-swing, since consumer debt is the lowest it has been in years, and capital expenditures by businesses are starting to trend up too.
There are some head-aches that concern me. Student debt is not levelling off, and the household formation rate has not really improved all that much, IIRC. The long-term unemployed are not really re-integrating into the labor force, but are instead dropping out altogether. The baby boomer generation does not appear to have enough saved for retirement, the real estate markets seem to have undergone a permanent shift towards high rents and low home-ownership in some large municipalities, and health care spending might be ticking up again.
We can't really crow too much about government successes. We definitely did a LOT better than I expected, but we cut a lot of funding out of the discretionary budget, and we might be benefitting from a lull in medical spending. We may not get so lucky moving forward.

JAD_333
07 May 14,, 03:58
I wonder how many of the people dropping out of the employment force are really unemployed. Purely anecdotal, I laid off a couple of guys a ways back; both ran out their unemployment benefits and are now working under the table and making decent money. It's not uncommon, but just how widespread seems unmeasurable.

Champ, just why should student debt level off, or do I miss your meaning? It seems to be ever expanding. Why is it a negative?

Albany Rifles
07 May 14,, 04:10
So looking around at how trashed our infrastructure is how much should we plow into that?

Would public debt to pay for rebuilding infrastructure, which brings a lot of well paying construction jobs into the economy...how will that help?

JAD_333
07 May 14,, 05:25
The prospects for future infrastructure work on bridges & highways is bleak. The Federal Highway trust fund will be out of money by this fall. There's talk of raising the Federal gas tax 15 cents or dropping a few billion into the fund. Congress will have to act soon. Modernizing our transportation system would be money well spent. Jobs and better roads and bridges...who could be against that?

astralis
07 May 14,, 05:29
Modernizing our transportation system would be money well spent. Jobs and better roads and bridges...who could be against that?

Barack Obama Floats Transportation Bill But Republican Balk - TIME (http://time.com/83073/barack-obama-transportation-republicans/)

JAD_333
07 May 14,, 06:24
Barack Obama Floats Transportation Bill But Republican Balk - TIME (http://time.com/83073/barack-obama-transportation-republicans/)

There's another bill with bipartisan support earmarked for bridge rehab that the GOP apparently prefers. It could be expanded to include highway construction. I believe the bill calls for a budget of $30 billion.

Albany Rifles
07 May 14,, 14:55
So again, it is arguing over who gets the creedit and money.

One Congressman's pork is another's vitally needed project to improve (insert KEY PROJECT here!)

Saw a report on Sunday in the Richmond paper that would have been making laugh if it wasn't so sad.

The DEPT of STATE is funding the construction and expansion of a Diplomatic Security Training Center at FT Pickett in Blackstone, VA. It will pump $385 million into the economy of several Southside Virginia counties who are in dire need of help since the collapse of the entire textile industry. The paper was full of quotes from two members of the Virginia House about how this federal PROGRAM would help LOCALleaders grow VIRGINIA jobs.

Yet these same 2 worthies are fighting tooth and nail against the Medicaid expansion under the ACA which will be funded with Federal dollars because it FEDERAL dollars are bad. Never mind the that plan is a Repuiblican Senators plan backed by the Virginia business community. It has its issues, sure. But meanwhile tens of thousands continue withour healthcare.....many in the very districts these 2 represent.

GVChamp
07 May 14,, 15:29
JAD,
Student debt is already pretty damn high, and saying "not levelling off" means "getting even higher." That's bucking the trend of decreasing debt burden for practically everyone else. It's also not just an issue of more people going to college...the average debt burden is getting higher, too.
That's not necessarily a problem if people can get jobs that can pay those debts. They can't. The job market is really bad, and according to the NY Fed, the "true" delinquency rate for student debt is probably close to 30% (!!!!!!)
That's a pretty big overhang for people.
In combination with the low household formation rate (running at 200k, lower than last year, much lower 1 million historical average), it means that the economic engine is crippled for a lot of young couples. Also see the number of kids still living at home.
Basically the next generation got face-shot and it hasn't recovered (and might not ever).
That's a huge economic head-wind.
One stat alone doesn't tell you the whole story, all of them in total provide a bleak narrative. Anecdotally, the people in my age group are STARTING to recover, but I come from a rather wealthy background.

SteveDaPirate
07 May 14,, 17:25
Unfortunately a lot of the people I went to college with are currently putting their degrees to use by serving coffee or bar tending. Not much of a return on investment there. When I graduated and realized how horrible the job market was, I stayed in school and got a Master's. Luckily I found a good and interesting job, but much of my peer group is severely underemployed despite a college degree and general competence.

I think that a lot of the challenge for young adults looking for work has to do with the baby boomers not retiring. When the markets crashed, a lot of people lost big chunks of their savings, and as a result they are staying in the workforce longer than they anticipated. In addition to the private sector's slow hiring, the sequester and draw down of military forces, means the public sector isn't bringing in much new talent either.

I expect the situation to improve when the baby boomers all retire in a few years. Yet, when that occurs, companies may not be able to fill all the recently vacated positions with qualified people, as a fair percentage of my peers have dropped out of the workforce entirely.

JAD_333
07 May 14,, 18:06
So again, it is arguing over who gets the creedit and money.

One Congressman's pork is another's vitally needed project to improve (insert KEY PROJECT here!)

Saw a report on Sunday in the Richmond paper that would have been making laugh if it wasn't so sad.

The DEPT of STATE is funding the construction and expansion of a Diplomatic Security Training Center at FT Pickett in Blackstone, VA. It will pump $385 million into the economy of several Southside Virginia counties who are in dire need of help since the collapse of the entire textile industry. The paper was full of quotes from two members of the Virginia House about how this federal PROGRAM would help LOCALleaders grow VIRGINIA jobs.

Yet these same 2 worthies are fighting tooth and nail against the Medicaid expansion under the ACA which will be funded with Federal dollars because it FEDERAL dollars are bad. Never mind the that plan is a Repuiblican Senators plan backed by the Virginia business community. It has its issues, sure. But meanwhile tens of thousands continue withour healthcare.....many in the very districts these 2 represent.


Buck, this Medicare thing in Virginia portends badly for the state on several levels. Taking the Federal subsidy means accepting conditions which could place a large tax burden on the state. The subsidy is ok for year one, two and three, but after that it falls, and how far is totally up to the Feds. And taking it means adopting care standards determined by the Fed. Couple a shrinking subsidy with expanded services and future inflation and you could be looking at huge and rising costs to the state which will lead to either cut backs in other parts of the state budget or increased taxes.

This isn't about whether Federal dollars are bad, but the fine print that comes with some of them. Gaining a federal facility in some remote county has a positive economic impact, whereas signing on to federal grant program can have a negative economic impact because of the conditions they impose on the state. The latter is what the state GOP is attempting to fend off. It's a fiscal conservative position which the voters are free to reject, but so long as the state house of delegates are in control of the GOP, the Medicare subsidies will be rejected, unless, of course, if the governor is able to run the state without a budget, as he has threatened to do. It might be unconstitutional, but will make for some nice headlines.

JAD_333
07 May 14,, 19:13
Unfortunately a lot of the people I went to college with are currently putting their degrees to use by serving coffee or bar tending. Not much of a return on investment there. When I graduated and realized how horrible the job market was, I stayed in school and got a Master's. Luckily I found a good and interesting job, but much of my peer group is severely underemployed despite a college degree and general competence.

I think that a lot of the challenge for young adults looking for work has to do with the baby boomers not retiring. When the markets crashed, a lot of people lost big chunks of their savings, and as a result they are staying in the workforce longer than they anticipated. In addition to the private sector's slow hiring, the sequester and draw down of military forces, means the public sector isn't bringing in much new talent either.

I expect the situation to improve when the baby boomers all retire in a few years. Yet, when that occurs, companies may not be able to fill all the recently vacated positions with qualified people, as a fair percentage of my peers have dropped out of the workforce entirely.


I have a theory that a college degree becomes less significant as the number of people who have them grows. Employers in my day had enough positions to absorb most college grads. That's no longer true, as you've seen. It's no longer simply a byproduct of down economic times. It's a glut exacerbated by the prevalence of easy majors, like communications and social studies.

Back in the day, a high school diploma was a bid deal and a college degree a really big deal. As the number of college grads grew, they took the jobs previously given to high school grads. Now almost everyone has a high school diploma, which is practically meaningless because standards have slipped so badly, and many have college degrees, which is becoming meaningless because they too have slipped in terms of standards.

Now the new thing to have is a masters because that signifies that the holder can read and write, analyze and make judgements (the old expectation for college grads). In time, it too may become debased.

astralis
07 May 14,, 20:08
JAD,


I have a theory that a college degree becomes less significant as the number of people who have them grows. Employers in my day had enough positions to absorb most college grads. That's no longer true, as you've seen. It's no longer simply a byproduct of down economic times. It's a glut exacerbated by the prevalence of easy majors, like communications and social studies.


yup, education inflation. this is also why college costs are spiraling out of control; it is seen as a basic MANDATORY so colleges are free to jack up the price.

it also means a lot of people whom aren't ready for college or aren't fit for college get in, and basically spend the next 4 years getting drunk/laid/high.

we really need to establish a more concrete apprenticeship program in the US, which obama to his credit has made some moves towards.

also, we'll probably see a move towards companies more actively giving out knowledge tests vice checking off boxes. this has long been a staple of silicon valley companies.

JAD_333
07 May 14,, 21:14
JAD,



yup, education inflation. this is also why college costs are spiraling out of control; it is seen as a basic MANDATORY so colleges are free to jack up the price.

it also means a lot of people whom aren't ready for college or aren't fit for college get in, and basically spend the next 4 years getting drunk/laid/high.

we really need to establish a more concrete apprenticeship program in the US, which obama to his credit has made some moves towards.

also, we'll probably see a move towards companies more actively giving out knowledge tests vice checking off boxes. this has long been a staple of silicon valley companies.


Funny, I was going to use the same term, 'education inflation' and then decided it was hard to draw an analogy to explain it. You did it.

One problem we have in this country is a softness toward people's feelings that causes us to bestow awards where they are not earned. You may have heard me grouse about my son's soccer league where every player on every team got the exact same trophy. When I asked why, one of the organizer's told me they didn't want any kid to feel bad because his team lost. Well, hell, that's exactly what we ought to feel when we lose. The same thing goes in education; if you can barely read, write like a 1st grader, and don't know France is in Europe, you don't deserve a high school diploma and you sure as hell shouldn't be accepted into a college. Diplomas are for many just hollow achievements with little behind them, and it's getting worse.

Glad we agree on something. :)

Albany Rifles
07 May 14,, 21:49
JAD,

I guess this is where you and I fundamentally disagree.

This is a Republican program. This is what was proposed to counter the Dems in 1993/1994

I fear it will cost us more in the long run.

But you and I can agree to disagree.

What I cannot abide is the sheer hyprocrisy of those and others like them. Never once did they acknowledge that dollars from elsewhere in the country are coming to help their slice of Southside Virginia. And none of these jobs are generated because of great local businessmen.

It is pork. Period.

It may be needed pork but it is pork none the less.

And I'd rather have my tax dollars pay for folks to be covered on Medicaid. And I will tell who else wants to see it too...all of the hospitals in Virginia who are drowning in red ink for having to be the primary care provider for the indegent. I hear this from my wife on a daily basis.

GVChamp
07 May 14,, 22:07
On this subject, I would recommend "The Great Stagnation" and "Average is Over." These are short e-books written by econ professor Tyler Cowen, who is the co-author of Marginal Revolution. Marginal REVOLUTION (http://marginalrevolution.com/)

This might explain why the US economy is generating sub-par results for a lot of college graduates. The idea is that the Industrial Revolution has fully matured and all the easy innovation opportunites are over, which has created stagnant incomes. There are green shoots of another revolution, the IT Revolution, but that requires a different skill-set, and there's a lot of winner-take-all features that punish middle-of-the-roaders. Gotta up your game or suffer (hence "average is over:.")

The reason I suggest those is not because they are correct, but because it shifts the conversation to structural changes in the economy.

JAD_333
08 May 14,, 01:53
JAD,

I guess this is where you and I fundamentally disagree.

This is a Republican program. This is what was proposed to counter the Dems in 1993/1994

I fear it will cost us more in the long run.

But you and I can agree to disagree.

What I cannot abide is the sheer hyprocrisy of those and others like them. Never once did they acknowledge that dollars from elsewhere in the country are coming to help their slice of Southside Virginia. And none of these jobs are generated because of great local businessmen.

It is pork. Period.

It may be needed pork but it is pork none the less.

And I'd rather have my tax dollars pay for folks to be covered on Medicaid. And I will tell who else wants to see it too...all of the hospitals in Virginia who are drowning in red ink for having to be the primary care provider for the indegent. I hear this from my wife on a daily basis.


We don't disagree on the need to get care to people who can't afford it. The question is how.

The ACA did indeed grow out of a 10-year old Republican-backed idea advanced by a conservative think tank, the Heritage Foundation. The idea was put forth long before the recent economic crisis and the original plan did not include many of the measures that ended up in the bill which became the ACA or Obamacare. Only a few core features, such as basing it on private insurance, survived from the Heritage plan, and even that plan would have had rough sailing in Congress. Romney-care is working in Mass largely because it was adapted to the state. A Federally operated plan is one-size fit all. And over-arching everything, there is that basic conservative reluctance to expand Fed powers. I agree, it will cost us more in the long run--no matter how we do it, single payer or otherwise.

Don't know what to say about the Southside pork. You could ask our dem senators. They voted for it.

Agree to disagree.

DOR
08 May 14,, 04:46
So looking around at how trashed our infrastructure is how much should we plow into that?

Would public debt to pay for rebuilding infrastructure, which brings a lot of well paying construction jobs into the economy...how will that help?

Think of it this way: When money (interest rates) is this cheap, the return on investment sky rockets. In the case of infrastructure – new or rebuilt – the investment will have to be made someday. So, in order to save billions in interest payments at some future date, the common sense thing to do when unemployment is uncomfortably high (but falling) and money is ridiculously cheap is to issue 30+ year T-bills and “build, Baby, build!”

GVChamp
09 May 14,, 17:35
While I agree, hurdle rates aren't based just on capital costs.

GVChamp
09 May 14,, 20:06
Sorry for the double-post, but my work browser does not use the edit function correctly.
Marginal Revolution actually had an interesting post on performance of the US vs. Canadian economy today:
Stephen Williamson on the United States, and Canada (http://marginalrevolution.com/marginalrevolution/2014/05/stephen-williamson-on-the-united-states-and-canada.html)
Essentially, Canada, which should look remarkably similar to the US, doesn't: there's economic shifts going on that go beyond watering down college standards or everyone going to college. There is a global economy that is exposing Americans to competition, which has increased somewhat the unemployment and underemployment rate for recent college graduates, that does not apply to the energy-booming Canadian economy.
The US economy simply isn't dynamic enough to soak up these graduates. That's additionally damaged by the credit crisis and the aggregate demand short-fall, but there's a supply side issue at work, too. I expect this temper somewhat, as China slows down and enters a middle income trap, and India won't replace China.

DOR
16 May 14,, 03:53
The US Consumer Price Index rose just under 2% year-on-year in April, the 18th month in a row below that level.
That’s the longest period of low inflation since 1958-66.

JAD_333
16 May 14,, 04:26
The US Consumer Price Index rose just under 2% year-on-year in April, the 18th month in a row below that level.
That’s the longest period of low inflation since 1958-66.

Great number for the macro people, but from my micro standpoint prices are rising faster than 2% a year, especially for food, building materials and anything made of metal or petroleum byproducts. Nickle is down, copper is down...maybe there's hope for some relief...

astralis
16 May 14,, 04:32
and we can thank Putin for driving investors away from Russia to the US, making our borrowing costs even lower:

http://www.nytimes.com/2014/05/16/upshot/interest-rates-are-falling-thank-vladimir-putin.html

JAD_333
16 May 14,, 05:03
and we can thank Putin for driving investors away from Russia to the US, making our borrowing costs even lower:

http://www.nytimes.com/2014/05/16/upshot/interest-rates-are-falling-thank-vladimir-putin.html

Asty:

How long will that last? I think we're on the downhill side of this bickering over Ukraine...it'll be a bumpy ride, but where else can it go now, assuming the captains of the ships don't pull a Captain Queeq.

astralis
16 May 14,, 14:59
JAD,


How long will that last? I think we're on the downhill side of this bickering over Ukraine...it'll be a bumpy ride, but where else can it go now, assuming the captains of the ships don't pull a Captain Queeq.

i'd say at least for the medium-term, even assuming a best case scenario. Putin just demonstrated that he's more than willing to sacrifice economic interest for short-term gain.

JAD_333
16 May 14,, 20:20
JAD,



i'd say at least for the medium-term, even assuming a best case scenario. Putin just demonstrated that he's more than willing to sacrifice economic interest for short-term gain.

Asty:

Yeah, I agree. But it's like fasting...it's relatively easy for people to sacrifice food for a day or two to accomplish a goal, but if they keep going, they'll waste away. Putin would be silly to sacrifice economic gain for political gain. He went for the whole hog, got a fairly large chunk of it with Crimea. Time for him to call it a day.

GVChamp
18 May 14,, 16:54
Russian energy exports have jumped up.
You will have an initial panic and then the cash will return because cash is in a desperate search for yield. Right now investors are plowing money into Spanish bonds despite the EU still in the crapper.

astralis
18 May 14,, 20:28
GVChamp,


Russian energy exports have jumped up.
You will have an initial panic and then the cash will return because cash is in a desperate search for yield. Right now investors are plowing money into Spanish bonds despite the EU still in the crapper.

relative safety vice yield, otherwise they wouldn't be jumping into bonds at all. also explains why US borrowing costs are going down, too.

as for energy exports going up, that's very much a double-edged sword. making the economy even more single-resource dependent is going to be a b*tch given price fluctuations.

snapper
24 May 14,, 05:50
I understand that Barclays have been fined 26m for fixing the price of gold. Who'd have believed it?

JAD_333
24 May 14,, 07:49
They never learn. Another rogue trader.

snapper
25 May 14,, 01:08
Rogue traders get prosecuted, rogue systems get fined.

Doktor
25 May 14,, 01:38
Rogue traders get prosecuted, rogue systems get bailed.

fixed.

DOR
30 May 14,, 03:24
The answer is, both. On a quarter-to-quarter, seasonally adjusted basis, the economy contracted by 0.06%, as opposed to earlier estimates of a 0.01% rise. But, on a year-to-year basis, expansion increased from 2.05% to 2.33%!

In real terms, capital investment grew 5.3% year-on-year, vs. 3.7% in results previously released. Private consumption barely moved (+2.54%, up 0.02 percentage points). Both exports and imports were also up.

The disappointment was investment in non-residential structures, which is now thought to have expanded 4.9%, as compared to an earlier 7% rise. Federal spending, defense and non-defense all continued to fall at the same pace as originally thought. Defense is now down 13 quarters in a row, and federal spending 12 out of 13.

As in each quarter in the past two years, the private consumption deflator remained well below 2%, at +1.1%.

http://www.bea.gov/itable/error_NIPA.cfm
News Release: Gross Domestic Product (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm)

JAD_333
30 May 14,, 07:52
They're blaming the drop on the weather. In which case, we should see better than expected growth in the current quarter.

However, what's in store for the year. Agriculture is going to be hit hard this year. Severe lack of rain in the Oklahoma area may result in the worst wheat crop since 1958. That will impact beef prices, equipment sales...etc.

Albany Rifles
30 May 14,, 14:46
However, what's in store for the year. Agriculture is going to be hit hard this year. Severe lack of rain in the Oklahoma area may result in the worst wheat crop since 1958. That will impact beef prices, equipment sales...etc.

Good thing Senators Inhofe and Coburn are such staunch supporters of stopping greenhouse gas emmissions and global warning! :rolleyes:


Wait....